Riyadh - Mubasher: National Industrialization Company (Tasnee) revenue rose 7% year-on-year to SAR 3.86 billion and came in-line with the expectations of Al Rajhi Capital of SAR 3.83 billion and consensus estimate of SAR 3.89 billion.
While we do not foresee a sharp pickup in fundamentals, we do expect a gradual improvement as the company realises cost benefits of restructuring, though most of it has already been realized.
The company’s gross profit more hiked 129.8% year-on-year to SAR 922.1 million, which came below the estimates of SAR 1,014 million.
The gross profit was boosted by the fall in average prices of raw materials propane and rutile, the report said.
Tasnee posted operating profit of SAR 444.6 million in the third quarter of 2016 against compared to a loss of SAR 47.8 million in the year-ago period.
Al Rajhi Capital noted that thanks to recovery in TiO2 prices in 2016, the company’s operating cash flow has already reached SAR 2.1 billion in the first nine months of 2016, meaning that the company will be able to manage its debt and capex requirements.
The Saudi-listed company’s specific trigger is the commercial launch of ilmenite processing plant at Jazan.
The investment firm stated that the key downside risks are increasing financial costs, due to rising SAIBOR and changes in feedstock pricing mechanism.
Al Rajhi Capital remain Neutral on the company with a target price (TP) of SAR 14.2 per share.
