Riyadh-Mubasher: NBK Capital, the investment arm of National Bank of Kuwait (NBK), lowered the stock’s fair value to SAR 93.4 from SAR 95.3, and downgraded its recommendation to ‘Hold’ from ‘Buy’.
SABIC has outperformed the broader Saudi Petrochemical Index by roughly 20% year-to-date.
“However, we believe that the company lacks catalysts to outperform its major regional peers in the short term,” the research firm said.
It added that SABIC’s YTD outperformance has been driven primarily by the company consistently beating market earnings expectations.
SABIC reported net income of SAR 15.7 billion for the first nine months of 2015, down 18% year-on-year, beating the market consensus by more than 28%.
“We have increased our 2015F net income by c.8%, driven primarily by the Q3-15 earnings beat. We are now 5% ahead of the Bloomberg consensus,” NBK Capital said.
The research firm cut its 2016F and 2017F earnings by 1% each as a result of slightly lower product price realisation forecasts that were broadly offset by improved margin expectations for the company’s global operations.
