Riyad Capital recommends 'hold' on Petro Rabigh; sets TP at SAR 23

Riyad Capital said in a review that it has recommended a “hold” rating on Rabigh Refining and Petrochemical Co. (Petro Rabigh) and set the stock’s target price at SAR 23 for the rest of this year.

The move comes after Petro Rabigh announced that it expects to see a financial impact of about SAR 52 million reflected in second quarter results due to unscheduled maintenance at its hydrogen production unit (HPU).

Riyad Capital also attributed the decision to maintenance plans set to begin in October that are said to have a negative impact on the stock.

Overall, the developments are expected to take a toll on Petro Rabigh’s FY15 financial statements.

The brokerage firm said it expects the company to report net earnings of SAR 246 million for this year.

It said the Rabigh Phase II project will likely generate stable income and higher profit margins. The project, which involves the expansion of the company’s complex, is expected to be commissioned in the first half of 2016. The overall investment for the project is estimated to be SAR 30 billion (approximately $8 billion).

Petro Rabigh is a joint venture between Saudi Aramco and Sumitomo Chemical.