SABIC’s Q2 2019 profit came below expectations: Al Rajhi Cap

Saudi Arabia Basic Industries Corp’s (SABIC) Q2 2019 profit of SAR 2.12 billion came below market expectations, Al Rajhi Capital said in a research note.

The research firm said that the current average selling price of the company’s various products during the third quarter is below the average price of the second quarter.

“A much lower feedstock prices will help SABIC post a better EBITDA profit in the third quarter (SAR 9.4 billion vs SAR 9.07 billion in Q2),” the note said, adding that profits may have reached the bottom in Q2.

It also predicted that lower product prices may continue till 2019-end and 2020, noting that this may offer excellent opportunity to buy for the long run, around three to four years. 

The research firm also expected SABIC to distribute a cash dividend of SAR 4.5 per share in 2019 and SAR 4 per share next year.

It also maintained a “Neutral” recommendation for the stock and maintained positions, with a target price of SAR 115 to SAR 108.