Advanced to achieve long-term growth on expansion plan execution: Riyad Cap

Logo of Advanced Petrochemical

Riyad Capital expects Advanced Petrochemical Co. (Advanced) to achieve long-term growth after implementing its expansion plan, according to a recent research note.

The brokerage firm said that Advanced can bear capital expenditures and debts for the Jubail project due to its strong financial position.

It further expects Advanced’s revenues to reach SAR 2.3 billion in 2021 and SAR 5.5 billion by 2024 with the start of operations for the Jubail project.

Riyad Capital indicated that the company's plan on completing the Jubail project will double both production capacity and revenues with the start of operations in 2024.

Advanced’s net profit is forecast to decline by 8% year-on-year (YoY) to SAR 546 million, on higher financing expenses, as the company signed SAR 1.5 billion Murabaha financing, and its subsidiary, Advanced Polyolefins Co., obtained Saudi Industrial Development Fund’s (SIDF) approval on a SAR 3 billion loan.

An improvement will be witnessed on the firm’s net profit from next year, with doubling of net profits by 2024, the brokerage firm highlighted.

As the distribution of the COVID-19 vaccine picks up pace, an increase in demand and an improvement in polypropylene selling prices are expected in the future.

Riyad Capital upgraded its recommendation on the stock to "Buy", raising the target price (TP) from SAR 58 to SAR 76 per share.

The "Buy" rating means that expected total return is greater than +15%.