Petchem firms to see higher Q4 profit, says Riyad Capital

Riyad Capital said on Thursday it expects the aggregate net income of ten Tadawul-listed petrochemical producers under its coverage to surge 111 percent year-on-year (YoY) to SAR 5.4 billion in Q4-2016 amid a spike in oil prices following the OPEC deal on output reduction.

“4Q2016 earnings are likely to be a mixed bag as few product prices have gone up (MEG, Methanol and Acetic Acid) but key product prices such as PP and PE remain at low single digits,” the brokerage firm added.

Meanwhile, ethylene prices were down, while propane and butane grew by double digits.

Saudi Basic Industries Corp.’s (SABIC) net profit is forecast to see a sharp rise of 56 percent YoY to SAR 4.8 billion in the same period as its subsidiaries continue to post better results amid low base effect. Its revenue is also projected to increase by 6 percent YoY.

Saudi Industrial Investment Group (SIIG) and National Petrochemical Co. (Petrochem) are expected to continue their losses of SAR 98 million and SAR 58 million, respectively, hurt by a 60-day shutdown in its polymer plant.

Rabigh Refining and Petrochemical Co. (Petro Rabigh) will likely narrow its losses to SAR 545 million in Q4.  

Saudi Kayan Petrochemical Co. will likely turn to a net profit of SAR 134 million, compared to a net loss of SAR 624 million in Q4-2015.

The combined revenue of petrochemical producers is projected to grow by 6 percent YoY in Q4-2016, backed by mixed growth in output prices and incremental volumes.