Tasnee to create more value from TiO2 business sale: Aljazira Cap
National Industrialization Co.'s (TASNEE) sale of the titanium dioxide (TiO2) business to Tronox Ltd. would enable Tasnee to create more value through strategic expansion in core business (petrochemicals), while considerably deleveraging its balance sheet, Aljazira Capital said in a note.
Shareholders may receive dividend payments in FY20, for the first time since FY15, Aljazira Cap. said downgrading Tasnee to “Neutral”, with a revised target price of SAR 18.50/share.
The deconsolidation of Cristal’s assets and liabilities from Tasnee's financial statements in Q2 2019 would result in Tasnee receiving returns in the form of SAR 6.274 billion (USD 1.673bn) in cash and 37.58 million in Class A shares in Tronox Co. (representing approximately 24 percent of the shareholding in Tronox).
"We believe that Cristal’s asset sales would directly enhance the company’s balance sheet and financial ratios owing to a highly leveraged balance sheet and the nature of volatility in the Tio2 business, which put overall margins under pressure in previous years".