The National Shipping Company of Saudi Arabia (Bahri) fourth-quarter net profit of SAR 207 million was higher than Al Rajhi Capital’s estimates, the research firm in an earnings review.
However, Bahri’s Q4 revenues were lower-than-expected – 13.5 percent year-on-year (YoY) decline versus Al Rajhi’s estimate of 11 percent decline.
It operating margin of 23 percent, meanwhile, was much higher than Al Rajhi’s estimate of 14.9 percent.
“Despite operating profit beat of SAR 110 million, and higher than expected share of profit from Petredec, the reported net profit stood just SAR 55.6 million higher versus our estimate,” Al Rajhi Capital said.
“We believe this could be a result of one-off loss to the tune of SAR 50 million,” it added.
Al Rajhi Capital has put Bahri’s target price under review, noting that it will study the shipping firm’s detailed financial reports to ascertain the exact reasons behind higher operating profit and the one-off loss.
Al Rajhi Capital’s last published target price on Bahri was SAR 3 per share.
“We believe the average VLCC day rates in 2018 will be similar to that in 2017, with a slightly upward bias,” the report said. “However, 2018 will witness the complete benefit of 5 new VLCCs delivered in 2017 and another 5 VLCCs are scheduled to be delivered this year.”
While 2018 revenue growth is expected to be driven by higher number of VLCCs, margins could come under pressure from increased bunker fuel prices.
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