National Petrochemical Co.’s (Petrochem) net income of SAR 131 million in the fourth quarter (Q4) of 2019 came below Riyad Capital’s and consensus estimates of SAR 165 million and SAR 150 million respectively.
The brokerage firm indicated in a research note that the net margin narrowed to 7% in Q4 2019, compared to 9% in Q3 2019, and 11% in Q4 2018.
The report also maintained “Neutral” on Petrochem’s stock, keeping its target price at SAR 32, following the board of directors’ approval to reduce the capital of its subsidiary Saudi Polymers Co. by 70% to SAR 1.41 billion from SAR 4.8 billion, which is expected to be executed in 2020.
According to Riyad Capital, the “Buy” recommendation means that the total expected returns are greater than 15%.
According to data compiled by Argaam, Petrochem's net profit for Q4 2019 fell 44.5% YoY to SAR 131 million on lower selling prices, lower other income and higher zakat expenses.
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