Bahri's Q1 net profit beat estimates, says Albilad Cap

The National Shipping Company of Saudi Arabia’s (Bahri) net profit of SAR 123 million for the first quarter of 2018 exceeded Albilad Capital and the consensus estimates of SAR 91 million and SAR 98.5 million, respectively, the financial research firm said in an earnings review.

Bottom line plunged 68 percent year-on-year (YoY) due to lower spot market rates in oil transportation, higher bunker costs, an investment loss of SAR 21 million from the company’s 30.3 percent stake in Petredec Ltd, an increase in cost of finance, and higher general and administrative expenses.

Revenues in Q1 stood at around SAR 1.5 billion, down 25 percent YoY as the lower tanker rates offset the positive impact of fleet expansion to 91 carriers up from 84 carriers in March 2017.

Bahri received four tankers year-to-date, while a new tanker will be delivered by the end of H1, to mark the last out of 10 carriers worth $ 949 million, made in South Korea for delivery in 2017-2018.

In August 2017, Bahri Dry Bulk Company, 60 percent owned by Bahri, inked a contract with Hyundai to build four bulk cargo carriers, which will be delivered in H1 2020 with a total cost of $120 million.

“The fleet expansion will help reduce the impacts of transport rates and reinforce the company's competitiveness in the market,” Albilad Capital said.

Looking forward, a recovery in spot rates in H2 2018 is forecasted on higher scrapping, lower vessel delivery as well as the increase in global oil demand by 1.5 million barrels per day in 2018, it added.

The firm maintained an “overweight” rating on the stock with a target price of SAR 32 per share.