NCB Capital places ‘neutral’ rating on Tasnee

NCB Capital placed a “neutral” rating on National Industrialization Company (Tasnee), with a target price of SAR 24.5.

“Ongoing delays in operating the new slag facility, the structural issues of the acrylate project, and weak TiO2 (titanium dioxide) outlook remain key risks,” NCB Capital said in a research note. “However, the stock declined significantly in the last few weeks and offers a good entry point.”

Tasnee reported the second consecutive net loss of SAR 108 million against NCB Capital’s estimated net profit of SAR 116 million.

The company’s operating expenses were SAR 636.5 million, 40.4 percent higher than NCB’s estimates because of the cost related to the new acrylate project. The project has been reporting losses since its commercial operation in third quarter of 2014.

Tasnee aims at restructuring the project to reduce cost and commissions.

“We believe such changes are lengthy and will delay the breakeven point to 2016E,” NCB Capital added.