SFC initiated coverage of the Saudi petrochemical equities through a comprehensive and detailed report, in which equities of four petrochemical companies were covered. Generally, the report describes that the sector has an optimistic outlook, is well positioned for global recovery and valuation of stocks is undemanding.
The report also noted that the stocks of SABIC, Yansab, SIIG and Advanced have enough room for upside and set the target prices for SABIC at SR132.0, Yansab at SR82.0, SIIG at SR43.5 and Advanced at SR53.0.
SFC commended the sector for its strong position in the global commodity chemicals market along with its low cost of production which leads to high profitability, cashflows and dividend yields, all of which are roughly double that of global peers. Furthermore, the report highlighted that ongoing global recovery is likely to lead to higher product prices and higher earnings for KSA petrochemical companies in 2014. All in all, SFC has an optimistic outlook for the sector.
The report covers the equities of Saudi Basic Industries Corp. “SABIC”, Yanbu National Petrochemical Company “YANSAB”, Saudi Industrial Investment Group “SIIG” and Advanced Petrochemical Company “Advanced” and can be accessed on SFC’s website.