Saudi Kayan Petrochemical Co. (Saudi Kayan) reported net income of SAR 1.25 million in Q3 2019, exceeding NCB Capital and consensus’ estimates losses of SAR 184 million and SAR 134 million, respectively.
“We believe better than expected results are due to high operating rates and margins,” NCB Cap said in an earnings note.
Based on estimates, Saudi Kayan facilities operated at 115 percent, higher than estimated 110 percent and in-line with Q3 2018 of 114 percent.
“We were conservative on our operating rates assumptions given the curtailment of feedstock supply. However, the company’s strong performance proves the resilience of the Saudi producers and provides a strong positive read-across signal,” NCB Cap added.
“We are Neutral on Kayan with a target price of SAR 14.3,” the brokerage said, adding that the reduction of financial expenses is a key positive, while the ongoing weakness in the petrochemical market are the key concerns.
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