Saudi Basic Industries Corp.’s (SABIC) third-quarter revenue of SAR 43.7 came in line with Al Rajhi Capital’s estimates of SAR 43.5 billion, driven by higher prices and higher volumes, the financial advisory firm said in an earnings review on Sunday.
Gross margins came in marginally higher at 34 percent compared the brokerage's 33 percent estimate. Besides, savings from lower selling, general and administrative (SG&A) expenses resulted in SAR10 billion operating profit beating Al Rajhi's SAR9.3 billion estimate.
According to the report, the key upside triggers include faster than expected successful commercial launch of its future expansion projects and an increase in product spreads.
Downside risks include unexpected fall in oil price, which may cause decline in petrochemical product prices, unplanned plant shutdowns and any unexpected revision in the subsidized feedstock prices.
Al Rajhi Capital maintained its “neutral” rating, keeping the target price at SAR 135 a share.
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