Yansab beats Q3 estimates on high operating rates: NCBC

Yanbu National Petrochemical Co. (Yansab) reported a better than expected set of Q3 2018 results with a net income of SAR7 29 million, increasing 13.1 percent year-on-year (YoY) but declining 11.2 percent quarter-on-quarter (QoQ).

Earnings came 12.6 percent and 5.1 percent higher than the NCBC and consensus estimates of SAR 648 million and SAR 694 million, respectively.

“We believe the better than expected results are mainly due to higher operating rates and other income. We believe operating rates came-in at 96 percent, higher than our estimate of 92 percent,” the brokerage firm said in an earnings review on Monday.

“Revenues stood at SAR 2.11 billion, increasing 9.2 percent YoY and flat QoQ. This is 3.9 percent higher than our estimates of SAR 2.03 billion which we believe is due to higher than expected operating rates,” it added.

NCB Capital also maintained its target price of SAR 82.6 post its Q3 earnings results (current price of SAR 65), while remaining Overweight on the stock.

However, the brokerage firm noted Yansab is trading at 2019f PE of 11.2x, lower than the peer group average of 11.6x.