Saudi Kayan’s Q2 beats estimates, says Aljazira Cap

Saudi Kayan Petrochemical Co.'s (Kayan) Q2 net profit (SAR 242 million) exceeded Aljazira Capital’s estimates of SAR 210.1 million, and the market consensus of SAR 192 million, the brokerage firm said in an earnings review.

“The year-on-year (YoY) strong performance is mainly attributed to higher volumetric sales due to improved operating rate, despite the higher feedstock cost, higher average sales prices, the impact of scheduled maintenance during Q2 2016 and lower operating expense (OPEX) by 8.1 percent, despite the higher finance expenses and zakat provision,” Aljazira Capital added.

Revenue missed the brokerage firm’s forecast by 4.5 percent at SAR 2.3 billion in Q2.

The company’s full-year net profit and revenue are expected at SAR 443.4 million and around SAR 9 billion, respectively.

However, the brokerage expects gross margin to slightly decline in the coming quarters due to the new feedstock prices that would be implemented gradually during Q2 this year.

Moreover, sales volume in the second half of this year is likely to show more weakness due to the maintenance of ethylene glycol plant and olefins plant.

Aljazira Capital maintained its “Overweight” rating on Kayan’s stock with a target price of SAR 10.4 per share.