Yanbu National Petrochemical Co.’s (Yansab) Q2 2019 net profit of SAR 316 million fell short of NCB Capital’s estimate of SAR 402 million and consensus forecasts of SAR 401 million, the brokerage said in a recent earnings note.
“We believe the weakness is mainly attributed to lower than expected margins and higher opex. Gross margins came-in at 26.3% in Q2 19 versus our estimate of 30.3 percent,” NCB Capital added.
Revenue came in at SAR 1.6 billion, in line with NCB Capital’s estimate. The second-quarter gross profit of SAR 432 million missed the brokerage firm’s expectations of SAR 494 million.
Yansab’s board of directors announced a cash dividend of SAR 1.75 per share for H1 2019 - similar to the H1 2018 levels – but lower than NCB Capital’s estimate of SAR 2.0 per share.
NCB Capital said it will remain cautious on the stock as improved efficiency is likely to be affected by weakness in product prices.
NCB Capital added that it downgraded Yansab to “neutral”, setting the stock target price at SAR 74.
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