Saudi Q1 preview: SABIC to post $1.23bln net profit; Aramco's profit at $17.24bln

Saudi Aramco's topline and bottom line are set to improve sequentially, says Al Rajhi Capital

  
Investors monitor a screen displaying stock information at the Saudi Stock Exchange (Tadawul) following the debut of Saudi Aramco's initial public offering (IPO) on the Riyadh's stock market, in Riyadh, Saudi Arabia, December 11, 2019.

Investors monitor a screen displaying stock information at the Saudi Stock Exchange (Tadawul) following the debut of Saudi Aramco's initial public offering (IPO) on the Riyadh's stock market, in Riyadh, Saudi Arabia, December 11, 2019.

REUTERS/Ahmed Yosri

Saudi Basic Industries Corporation (SABIC) is expected to make a first quarter net profit of 4.61 billion Saudi riyals ($1.23 billion), driven mainly by higher product prices and better operating efficiency, according to Al Rajhi Capital.

For the same quarter in 2020, the petrochemicals giant made a net loss of 1.05 billion riyals.

In its Q1 2021 earnings preview, the investment bank said for the petrochemical sector as a whole, higher product prices, backed by healthy demand and tight supply, are likely to lead the combined earnings of the sector higher.

Saudi Aramco’s topline and bottom line are set to improve sequentially, driven by increased oil prices, the preview said. Q1 net profit is estimated at 64.65 billion riyals ($17.24 bln), marginally higher on year.

SABIC affiliate, Yanbu National Petrochemical Company (Yansab) is projected to make 206 million riyals, nearly double over its net profit in the year-ago period. However, the estimate is 38 percent below what it made in the last quarter.

Telecom sector

The kingdom’s largest telecom operator, Saudi Telecom’s Q1 is seen at 2.63 billion riyals, nearly 10 percent lower y-o-y. “We expect STC’s financial performance to remain broadly stable given its sticky high ARPU (average revenue per user) customer base,” Al Rajhi Capital said.

Zain KSA is forecast to make 55 million riyals, 47 percent lower y-o-y, impacted by the “weakness in the number of expats.” Mobily’s net profit estimate is 253 million riyals, nearly double its effort in the year-ago period.

F&B

“Further, we expect a negative top-line growth for the F&B sector due to the expat exodus, reduced pocket size, and delay in school re-opening,” the note said.

In the sector, Almarai’s topline will grow moderately while the bottom-line will remain under pressure due to pressure in gross margins. The dairy producer’s Q1 2021 net profit is expected at 315 million riyals, 14 percent lower y-o-y.

Savola is likely to make a Q1 profit of 79 million riyals; down more than half y-o-y but 76 percent higher q-o-q, Al Rajhi Capital said.

Among retailers, Jarir Marketing Co. is seen posting a net profit of 250 million riyals, a shade lower y-o-y.

Healthcare

Within the healthcare sector, the Q1 2021 results are likely to remain positive mainly due to improvement in utilization, the note said.

Out-patient traffic growth is expected to continue to recover and grow in the quarter.

The Q1 numbers of Mouwasat Medical Services Co, one of Saudi Arabia's largest listed healthcare providers will come in at 153 million riyals, up 41 percent y-o-y, Al Rajhi Capital said.

Cement

Meanwhile, cement companies’ results are likely to come under pressure during the quarter, on the back of lower growth in volumes and pressure on cement prices on a y-o-y basis.

Arabian Cement is set to make 43 million riyals, 5 percent lower y-o-y; Saudi Cement will come in 10 percent lower at 133 million riyals, and Yamama Cement at 57 million riyals, plunging 54 percent y-o-y.

(Writing by Brinda Darasha; editing by Seban Scaria)

brinda.darasha@refinitiv.com

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