Saudi International Petrochemical Co.’s (Sipchem) third-quarter net profit of SAR 180.3 million came higher than NCB Capital (NCBC) and consensus’ estimates of SAR122 million and SAR156.3 million, respectively.
"We believe the reason behind the variance is the higher than expected operating rates," the brokerage firm said.
Revenue grew 25.8 percent year-on-year (YoY) to SAR1.34 billion, beating NCB's estimates of SAR1.2 billion, supported by higher-than-expected operating rates.
Despite the five-week shutdown at International Methanol Company (IMC) facility, starting Sept. 16, operating rates stood at 110 percent against the brokerage's estimate of 99.5 percent, indicating higher operating rates prior to the shutdown and inventory usage.
The debottleneck project aims to increase the efficiency of the facility with a capex of SAR 542 million. After the completion of the debottleneck project, IMC operating rates are expected to increase to 130 percent vs 117 percent in 2017.
While Sipchem didn't announce the financial impact, the brokerage firm estimates the financial impact to be worth SAR 50 million and reflect on Q4 2018 results.
Methanol prices rose 30.4 percent YoY at $396, while LDPE prices declined 3.0 percent YoY to $1,199. Acetic acid prices increased 54 percent to $642.
Earlier this month, Sipchem and Sahara signed a non-binding MoU for a planned merger.
NCB Capital recommended an “overweight” rating on the petchems major, setting the target price at SAR 23.1.
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