Riyad Cap says Amiantit facing ‘tough times’, suspends coverage

Saudi Arabian Amiantit Co.’s net loss, which widened by 72.4 percent year-on-year (YoY) to SAR 54 million in the first nine months of 2017, is tough to absorb on a fundamental perspective, Riyad Capital said in an earnings review.  

The company posted a one-off income of SAR 64 million from disposal of assets after Hobas merger. It reported earnings of SAR 6 million, against a loss of SAR 15 million in Q2 2017.

Adjusting for the one-off income, Amiantit would have recorded a loss of SAR 57 million in the third quarter of this year.

Revenue fell by 54 percent YoY and 59 percent on a sequential basis to SAR 133 million in Q3 2017 due to a drop in GCC business as delays and downsizing of projects continue.

Amiantit’s gross profit plunged 96 percent YoY in Q3 2017, slashing gross margins to 1.4 percent, compared to 17.1 percent in the previous quarter.

The company also recorded its third operating loss at SAR 33 million in four straight quarters.

“In our view and on a qualitative basis, Amiantit is experiencing tough times. The management is taking some initiatives but the time and outcome of the same is unclear to us,” the brokerage firm said.

Riyad Capital added that it is therefore challenging to issue forecasts amid complexity in the company’s lines of business spread across various regions.

“The current situation of the building material sector makes it challenging to derive forecasts and arrive at a long-term view and rating, especially since Amiantit is in the midst of a restructuring,” Riyad Capital added.

The brokerage firm added it would suspend coverage on Amiantit.