Itqan Capital initiates Yansab coverage with ‘neutral’ rating, TP of SAR 49.20

Itqan Capital initiated the coverage of Yanbu National Petrochemicals Co. (Yansab) with a “Neutral” recommendation and a target price (TP) of SAR 49.20.

The brokerage firm said in a research note that the improvement in the company's financial position provides room for potential investment opportunities.

“We believe that Yansab's profitability will remain unstable due to the blurred vision of the trade dispute between China and the USA,” it noted.

Itqan further said that the demand from China, it's primary importer, will provide short-term relief for Yansab.

“However, the increased competition with the US will continue to pressure petrochemical prices in the long-term, and hence, Yansab's profitability,” the firm said.

The brokerage also expects Yansab to post a net profit of SAR 1.24 billion in 2020 and SAR 1.32 billion in 2021. The key growth catalysts for Yansab include government support for petrochemical industry, and improvement in liquidity.