Riyadh - Mubasher: Albilad Capital ,stated through a recent research note that, it expects Advanced Petrochemical Co. to continue witnessing growth in earnings due to improving polypropylene prices, hiking volume sales and a sustaining SAR 3 cash dividend per annum.
Accordingly, Albilad kept its fair value (FV) for Advanced Petrochemical at SAR 52.75 per share, with “overweight” recommendation.
Advanced Petrochemical Co. posted a remarkable drop in bottom line in Q2 2016 hitting SAR 186 million, tumbling 23.5% from SAR 243.15 million in Q2 2015. However, net earnings surged 27.7% QoQ versus SAR 145.6 million in the first quarter, noted the research note.
Also, over the first half, bottom line plunged 0.23% to SAR 332 million sliding from SAR 333 million in H1 2015.
The company’s Gross profit (GP) came in at SAR 201 million in Q1 2016 slumping 23.8% YoY. Nonetheless, GP soared 27.7% QoQ driven by rising sales volume coupled with higher polypropylene prices compared to the previous quarter.
Operating income (EBIT) hit SAR 192 million in Q2 2016 shifting down 23.5% YoY while surging 33% QoQ fueled by tumbling polypropylene prices compared to Q2 2015.
Bottom line of Advanced registered SAR 186 million in Q2 2016 slipping 23.5% YoY compared to SAR 243.15 in Q2 2016 resulted from dropping average selling prices of polypropylene compared to the same quarter of 2015. However, polypropylene prices increased compared to the previous quarter of the current year and sales volume grew over the previous quarter.
Advanced’s second quarter’s net earnings missed Albilad’s estimate of SAR 163 million and analysts ‘consensus of SAR 169.45 million.
Albilad’s estimates of SAR 163 million were based on projected sales of 146 thousand tones in Q2 2016 where it believes the actual figure of SAR 186 million stemmed from 154 thousand tons.
Furthermore, the results included an income from the investment in SK Advanced Limited in South Korea amounted to SAR 8 million as well as impairments of SAR 9 million created from dropping value of investments available for sale.
Earlier, Advanced acquired a strategic stake in a Saudi listed company of SAR 387 million.The company did not disclose the firm’s name or stake percentage.
