Riyadh - Mubasher: Al-Rajhi Capital rose SABIC’s target price (TP) to SAR 85, after revising previous estimates, but it maintained its rating as Neutral.
This upgrade comes after the announcement of the financial results for the second quarter of 2016, which surpassed market estimates and was above Al-Rajhi Capital’s expectation, the research firm said in its report on Monday.
Q2 indicates SABIC’s cost cutting efforts coming to fruition as results, with revenue at SAR 34.5 billion above our expectation of SAR 33.8bn, and gross profit recorded SAR 11 billion bettering our expectation of SAR 8.7 billion, added the report.
About 70% of this profit increase came from corporate and metal segments and remaining from its core petrochemicals business as other cost of goods sold declined, the report indicated.
SABIC reported a significant 18% quarter-on-quarter reduction in costs through improvement in efficiencies and fall in naphtha prices in Europe and China, it added.
