Riyad Capital cuts SABIC to ‘hold’ on weak H2 estimates

Riyad Capital downgraded Saudi Basic Industries Corp. (SABIC) to “hold” with a target share price of SAR 112 on subdued second half estimates.

“We feel rising stock prices on positive results may be a good exit opportunity for the time being,” the brokerage company added.

A combination of rising petchem prices and stable feedstock levels has bloated gross profit and margins, Riyad Capital said in a research note.

“Given the recent oil price plunge and restricted upside on account of rising supply expectations, we maintain our full year estimates of SAR 19.35 billion.’’

SABIC made a net profit of SAR 6.17 billion in the second quarter, down 4.5 percent from a year earlier, but easily beating the SAR 4.75 billion estimated by Riyad Capital.