Logo of Advanced Petrochemical Co.
SNB Capital stated that Advanced Petrochemical Co.'s Q4 2021 net profit of SAR 161 million was less than its estimates of SAR 180 million.
This deviation is attributed to SK Advanced, a subsidiary located in South Korea, which incurred higher-than-expected losses of SAR 26 million, compared to estimates of SAR 5 million profit, which resulted from the closure due to maintenance as well as high feedstock prices, the research firm added.
It recommended 'Neutral' on the stock, setting the target price at SAR 76.3 per share.
The long-term outlook is positive, supported by the company's expansions and new factories, the research firm noted.
It added that a significant rise in global polypropylene production and higher feedstock prices in 2022 are expected to pressure prices and profitability.
SNB Capital expected that the Saudi petrochemical companies will record mixed profits in the fourth quarter of 2021 due to the rise in feedstock prices, indicating that the profits will be impacted by high operating rates.
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