Riyadh - Mubasher: Al Rajhi Capital upgraded its rating on Saudi International Petrochemical Company (Sipchem) to “Overweight” from “Neutral,” with a target price (TP) of 16.1 per share.
In view of the recent performance and the net debt level of SAR 17 per share, we expect Sipchem to pay no dividends in 2016,” the report said.
The research firm attributed the decrease in the share’s price to unexpected plant interruptions, further fall in product prices and increase in SAIBOR.
Methanol will continue to be the key driver for Sipchem and its price is likely to remain stable or increase, especially in China, supported by higher demand and increase in Coal price.
The third quarter of 2016 witnessed a defer of some methanol shipments into Q4 (Q3 inventory was up SAR 61 million quarter-on-quarter,) implying that a weak downstream performance was not the only factor that weighed on Q3 results, Al Rajhi Capital noted.
Sipchem reported net losses of SAR 59 million in Q3-16 against a net profit of SAR 71.6 million in Q3-15.
