SKPC released 1Q23 financial results posting 107% YoY (+5% QoQ) growth in net profit to record EGP520million, compared to EGP251 million in 1Q22 and EGP494 million in 4Q22. Revenues grew by 71% YoY (+27% QoQ) to EGP3,615 million in 1Q23, compared to EGP2,109 million in 1Q22 due to: * Weaker local currency (+85% YoY and +25% QoQ), despite a 16% YoY (+4% QoQ) decline in polyethylene USD global prices and a 20% YoY decline (+1% QoQ) in USD blended prices. * Sold volumes increased 15% YoY a...
We upgrade our fair value for SKPC from EGP12.00 per share to EGP22.35 per share, while maintaining our Overweight recommendation. Our new fair value is factoring in the following developments: * In October 2022, the government announced a new natural gas price formula that is linked to the global prices of polyethylene. According to our calculations, at a polyethylene price of USD1,100/ton, natural gas price will be USD4.4/mmbtu. SKPC uses ethane-propane feed which is sold at a premium to t...
SIDI KERIR PETROCHEM (EG), a company active in the Commodity Chemicals industry, is favoured by a more supportive environment. The independent financial analyst theScreener has confirmed the fundamental rating of the title, which shows 4 out of 4 stars, as well as its unchanged, moderately risky market behaviour. The title leverages a more favourable environment and raises its general evaluation to Slightly Positive. As of the analysis date March 22, 2022, the closing price was EGP 8.44 and its ...
SALES TAKE A HIT ON PLANT MAINTENANCE SKPC reported its results for 3Q21 where sales came in at EGP 1,098 million (-19% QoQ, +47% YoY). According to management, the quarterly slip in sales was on the back of planned plant maintenance which forced the company to operate at dampened capacity utilization as Ethylene utilization hit 58%, while PE utilization fell to 66%. Additionally, average selling prices for locally sold PE slid 13% QoQ to record EGP24,853/ton (USD1,584/ton), while PE exports ...
TOPLINE EXPANDS ON STRONG PRICE ESCALATION, DESPITE VOLUME SLUMP SKPC reported 2Q21 sales of EGP 1,360 million (+4% QoQ, +89% YoY). Despite a 7% QoQ decrease in core volumes sold (Ethylene, PE), the company managed to boost its topline sequentially owing to strong pricing which in turn continues to be driven by the ongoing commodity rally. Company disclosures indicated an average selling price for ethylene at EGP 15,781/ton (USD1,141/ton) (+6%QoQ), an average selling price for PE sold locally...
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
RAISE FV TO EGP13.40/SHARE We update our valuation for SKPC and revise our target price to EGP13.40/share from EGP9.55/share amidst a booming PE market with unusual tight supply from usual hubs. Our update reflects 1) A hike in oil prices forecast, 2) Recovery in PE prices, especially in 2021, 3) Elevated PE utilization rates; with the three factors looking increasingly likely to shore up SKPC’s profit-making capacity for the medium term. COMMODITY BOOM DRASTICALLY SHIFTS DYNAMICS The ongoing...
In this report we assess the average material prices for 2Q21 and depict the impact of pricing trends on the financial performance of the relevant listed equities in Egypt. Prices of raw materials in the food and beverages sector continued to normalize in 2Q21, except for prices of SMP and WMP. Accordingly, we expect a gradual recovery of margins to appear in the 3Q21 results of JUFO, EFID, DOMT and OLFIas price increases kick in and with seasonality of revenues. Most companies have an invent...
SLIGHT VOLUME DROP BRUSHED BY ROARING SELLING PRICES SKPC released detailed financial statements for 1Q21, showing a sales figure of EGP1,310 million (+38%YoY, +25%QoQ). Despite a 15% drop in core volumes sold (Ethylene, Polyethylene) from 64,346 tons in 4Q20 to 54,548 tons, and a drop in PE utilization rates to 84% versus 4Q20’s 88%, SKPC sales were boosted by booming HDPE prices which managed to average USD1,238/ton (+47%YoY, +19%QoQ). These prices reflect on SKPC local and export selling p...
We present the 1Q21 material prices that are relevant to the petrochemical, consumer and industrial & materials sectors. In our 12-page report, we depict the impact of such changes on the financial performance of listed equities in Egypt. We also present the quarterly breakdown of each sector. Most companies have inventory of raw material that covers somewhere around 2-3 months. The increase in raw material costs is slowing down in 2Q21. Accordingly, we expect the pressure on margins to appe...
PRICE AND VOLUME RECOVERY BODES WELL FOR SALES SKPC released its full financials for 4Q20. The company’s sales of EGP1,050 million (+46%QoQ, +2%YoY) was recharged by 1) improving Ethylene and PE utilization rates of production as rates reached 78% and 88%, up from 51% and 83% in 3Q20, respectively; 2) a 32% QoQ surge in Ethylene and PE volumes sold; 3) A solid 30% QoQ hike in average blended PE prices which hit EGP9,114/ton versus EGP7,001/ton in the preceding quarter. HDPE prices recorded he...
Price recovery lag and weak volumes underpin weak results SKPC released its audited 3Q20 financial statements, where sales came in at EGP746 million (-47% YoY, +4% QoQ). Although Ethylene and Polyethylene prices showed promising recovery on the back of resumption of operational activity which was mainly driven by East Asia as Ethylene prices demonstrated a 35% hike QoQ while PE prices were up 20%QoQ, SKPC was not able to mirror such gains, possibly due to a price lag, since management noted t...
Downgrade FV to EGP7.50; maintain Equalweight We downgrade our FV of SKPC to EGP7.50/share (down from EGP10.95/share) amid increasing pressure on the global polyethylene (PE) market due to the covid-19 outbreak. Our updated model of SKPC now reflects 1) lower PE prices, particularly for 2020, 2) a cut in oil price forecasts, 3) lower volume assumptions, and finally 4) the latest downwards revisions of SKPC’s feedstock cost. Given the dramatic crash in oil prices, and the weak demand environme....
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