Advanced Petrochemicals Co.’s Q4 2019 earnings of SAR 192 million exceeded analysts’ and market consensus of SAR 148 million and SAR 163 million respectively, Al Rajhi Capital said in a research note.
The brokerage firm attributed the results of the company to better-than-expected improvement in production cost efficiencies.
“While top-line came in at SAR 619 million, the company managed to lower its fixed production costs, resulting into gross and operating profits beat,” the note said.
“Going forward, we believe that despite likely stable polypropylene (PP) prices in the near-term, the company might witness a pressure on its margins in Q1 2020, given the steep rise in propane price, which is the highest since October 2018,” Al Rajhi added.
Al Rajhi continues to remain positive on Advanced due to strong plant operating rates, consistent operating performance, debt free balance sheet, and attractive dividend yield.
“We revise our target price (TP) to SAR 55 per share (from SAR 52 per share) and retain Overweight rating on the stock,” the note stated.
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