Earnings for Saudi companies across all sectors, expect for financial services, are expected to be largely tepid in the fourth quarter of 2017, Al Rajhi Capital said in a sectors’ earnings report.
The earnings of the petrochemical sector will likely decline marginally on a quarterly basis in Q4, as increased feedstock costs along with higher seasonal operating expenses could completely offset the improvement in product prices. SABIC’s net profit for Q4 is expected to reach SAR 5.17 billion.
Elsewhere, the cement sector continues to struggle with low government spending, as indicated by an 8.5 percent year-on-year (YoY) decline in cement sales volumes in the first two months of the quarter.
Twelve cement companies reported YoY decline in sales volume in the first two months of Q4, while three companies reported a YoY increase. Arabian Cement is expected to report a 29 percent YoY increase in net profit.
The telecom sector will likely remain subdued, mainly due to aggressive competition among the operators, allowing unencrypted VoIP calls, and levying the expat fee.
Among the three mobile operators, STC is expected to report a net profit of SAR 2.3 billion in Q4, up 9 percent YoY, as it remains defensive with its high dividend yield.
Food and Agriculture companies’ revenue growth is expected to remain modest in Q4 while profitability is likely to marginally improve. Almarai’s earnings are expected to increase by 4 percent YoY due to revenue being impacted from discontinuation of Qatar sales.
Retail companies under coverage are likely to witness tepid revenue growth, except for Al Othaim, which is projected to post a 29 percent YoY net income growth on the back of aggressive store additions, Al Rajhi Capital said.
Meanwhile, the healthcare sector is expected to see strong results in Q4, as earnings will surge due to the low base last year when the sector was impacted by high provisions. Care is expected to lead the sector’s growth for the quarter with a net profit of around SAR 30 million.
Banking sector earnings are also likely to rise from the low base of Q4 2016 on the back of higher NIMs and comparatively lower provisioning, the brokerage noted.
|
Q4 net profit estimates (SAR mln) |
|||
|
Company |
Q4 2017E |
YoY Change |
Average estimates |
|
Petrochemicals |
|||
|
SABIC |
5169 |
+14% |
|
|
Sipchem |
159 |
+72% |
|
|
SAFCO |
320 |
+7% |
|
|
Tasnee |
201 |
+63% |
|
|
Yansab |
602 |
-- |
|
|
Advanced |
160 |
(24%) |
|
|
Cement |
|||
|
Arabian Cement |
31 |
+29% |
|
|
Yamama Cement |
25 |
(42%) |
|
|
Saudi Cement |
98 |
(48%) |
|
|
Qassim Cement |
53 |
(40%) |
|
|
Yanbu Cement |
38 |
(62%) |
|
|
Southern Cement |
61 |
(61%) |
|
|
Telecommunications |
|||
|
STC |
2353 |
+9% |
|
|
Mobily |
(163) |
-- |
|
|
Zain |
16 |
-- |
|
|
Food and Agriculture |
|||
|
Almarai |
546 |
+4% |
|
|
Savola |
204 |
-- |
|
|
Herfy |
46 |
(17%) |
|
|
Catering |
111 |
+19% |
|
|
Retail |
|||
|
Jarir |
236 |
+10% |
|
|
*Fawaz Al-Hokair |
28 |
(30%) |
|
|
Al-Othaim |
122 |
+29% |
|
|
Extra |
50 |
+82% |
|
|
Health Care |
|||
|
Dallah |
82 |
+58% |
|
|
Mouwasat |
85 |
+18% |
|
|
Care |
30 |
-- |
|
|
Al-Hammadi |
28 |
+162% |
|
|
Other sectors |
|||
|
Maaden |
356 |
-- |
|
|
Shaker |
(46) |
-- |
|
|
Bahri |
151 |
(54%) |
|
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