SIIG’s Q4 beats estimates on higher operating rates, inventory usage: NCBC

Saudi Industrial Investment Group (SIIG) reported a net income of SAR 398 million in Q4 2017, significantly higher than NCB Capital and consensus estimates of SAR 239 million and SAR 228 million, respectively,

“We believe the variance is due to higher operating rates, the usage of inventory and/or end of year sales settlement,” NCB Capital said in a report.

Revenues came in at SAR 3.85 billion, significantly higher than SAR 1.76 billion in Q3 2017 and NCB Capital’s estimate of SAR 1.91 billion.

Gross income stood at SAR 788 million, 32.7 percent higher than estimates of SAR 594 million.

Gross margin stood at 20.5 percent, lower than NCB Capital’s estimate of 31.1 percent and 31.5 percent in Q3 2017.

“We believe the usage of inventory and the end of year sales settlement negatively impacted margins,” the brokerage added.

NCB Capital recommended an “Overweight” on SIIG with a target price of SAR 22.9.

“The stock’s key strengths are improvement in operational efficiency and higher oil prices,” the research firm said.