SABIC likely to see strong earnings in 2021 on higher petchem prices | ZAWYA MENA Edition

SABIC likely to see strong earnings in 2021 on higher petchem prices | ZAWYA MENA Edition

Al Rajhi Capital has raised its target price on Saudi Basic Industries Corp (SABIC) to 120 Saudi riyals ($32) per share from the earlier 115 riyals per share following its robust first-quarter 2021 results and on potential synergies from the Aramco deal.

In a report the Riyadh-based investment bank said given the upward movement in petrochemical prices over the past few quarters, the company is likely to witness strong earnings growth in 2021.

It has, however, maintained a Neutral rating on the stock as the price has “already gained 22 percent YTD, implying the fundamentals are already priced.”

The petrochemicals group, which is majority owned by state oil giant Saudi Aramco, reported a Q1 net profit of 4.86 billion riyals, pivoting from a loss in the same period a year earlier.

Al Rajhi Capital said the result was largely in-line top-line and bottom-line, as improved cost efficiencies, along with likely higher-than-expected equity income offset weaker-than-expected sales volume during the quarter.