Falcom maintains ‘neutral’ recommendation on Petro Rabigh

Falcom Financial Services maintained its “neutral” recommendations on Rabigh Refining and Petrochemical Company’s (Petro Rabigh) stock, setting the target price of SAR18.40 per share, the brokerage firm said in a research note issued recently.

Petro Rabigh posted a net loss of SAR308.5 million in Q2 2019 from a net income of SAR235 million in Q2 2018, as operating losses in the refined products segment widened to SAR501.2 million from SAR234.6 million last year, the report maintained.

Furthermore, decline in profits in the petrochemical segment aggravated the overall loss at the company level. Results were also impacted by the adoption of IFRS 16 and revision of useful lives of property, plant and equipment, Falcom added. 

 Refining Products segment plunged to an operating loss in H1 2019, wiping out the operating profit recorded in Q1 2019, Falcom noted. 

“The sharp decline in operating margins for refined and petrochemical products and rising financial charges remained a concern, even though the company managed to contain its SG&A expenses,” it noted.