Riyadh-Mubasher: Al Rajhi Capital set the price target of Yanbu National Petrochemicals (Yansab) stock at SAR 38.8, recommending 'Overweight'.
The stock has been among the best performers on Tadawul in the last two weeks, up 18% compared with 2.1% for the petrochemical index.
"In Q4, the company beat our as well as consensus estimates on better-than-expected utilisation rates," the research firm said.
For 2016, Al Rajhi Capital expects product prices to decline as compared to 2015, and costs to increase owing to the increased feedstock prices.
"We expect earnings growth to resume starting from 2017, as product prices are forecasted to improve in line with the recovery in crude oil prices," the think tank said.
The company operates at high utilisation rates and generates strong free cash flow on the back of its low capex requirements, which will allow it to maintain a high dividend payout ratio.
The stock offers a dividend yield of 4.9% on the current dividend forecast of SAR1.5 per share for 2016.
The company earlier reported net earnings of SAR 393 million for Q4, a fall of 36.4% compared with SAR 618 million in the year-ago period.
