Ma'aden's Q4 misses estimates on non-recurring items, Albilad Cap

Saudi Arabian Mining Co.'s (Ma'aden) fourth-quarter 2017 net loss of SAR 104 million missed Albilad Capital’s estimate of a net profit of SAR 329 million and consensus estimate of SAR 344 million profit.

Albilad Capital upgraded its rating on Maaden to "neutral" and raised the target price to SAR 50 per share from SAR 47.

While the mining giant’s sales rose 36 percent year-on-year (YoY) in Q4 2017, the bottom line was battered by an impairment loss of SAR 446 million in the fair value of Ma'aden Rolling Company's assets.

“Furthermore, the financing expenses stretched from SAR 288 million to SAR 518 million as the financial charges of the expansions, that launched commercial operations, were reported in the income statement rather than the balance sheet,” the report said.

Maaden also booked additional charges in Q4 due to the refinancing of existing debt.  Moreover, tax and zakat provisions soared from SAR 23 million to SAR 72 million.

Looking ahead, all of the company’s main expansions are now in or close to commercial production, which will be positively reflected on the income statement going forward.

Maaden will report higher depreciation charges and interest expenses as well.

Albilad Capital upgraded its rating on Ma'aden to "neutral" and raised the target price to SAR 50 per share from SAR 47.

“In spite of the fourth-quarter loss that stemmed from non-recurring items, our valuation is revised upward to SAR 50 per share to account for improved outlook for commodity prices in 2018,” the report said.