Amiantit’s Q2 net profit beats estimates, says Riyad Cap

Saudi Arabian Amiantit Co.’s (Amiantit) net loss of SAR 15 million in the second quarter this year beat Riyad Capital’s estimate of a SAR 38 million loss, the brokerage said in an earnings review.

While this is the fourth quarterly loss in a row, the company has managed to cut its losses by one-third compared to Q1 2017, due to lower impact of one-off adjustment.

Second-quarter revenue came in at SAR 322 million, beating Riyad Capital’s estimate of SAR 272 million. Revenue rose 14 percent quarter-on-quarter from overseas entities, but declined 37 percent YoY due to subdued growth in GCC markets.

Revenue from GCC markets fell 53 percent YoY to SAR 172 million in Q2 on stalled projects across the region and a market slowdown in Saudi Arabia. However, revenue from European subsidiaries improved to SAR 144 million in Q2 from SAR 93 million in the previous quarter.

Gross profit jumped 41 percent QoQ to SAR 55 million in Q2, beating the firm’s expectations of SAR 37 million.

While gross profit declined 26 percent YoY, it improved 41 percent QoQ on cost saving programs that led to margin rising to 17.1 percent in Q2, versus 13.7 percent last quarter.

Riyad Capital maintained a “Sell” rating on the stock with a target price of SAR 5 per share.

“The continued gloomy situation in the utility project market could decelerate growth in the coming quarters, as sector order book is almost at standstill. We wait for more clarity but maintain our 2017-19 estimates for now,” it added.