Saudi, the petrochemical giant, experience record sales and revenue this year after increasing the output capacity.
Compared to other gulf companies, Saudi Basic Industries Corporation (Sabic) has no plans to go to the markets.? The Saudi government owns 70 per cent of Sabic.
Sabic?s performance this year has been outstanding. The net income reached 7.69 billion Saudi riyals (Dh7.5 billion) in the first quarter of 2011, which is 41 per cent higher than the same period in 2010.
In 2011, Sabic had announced a 50:50 joint venture in Tianjin with Sinopec, state-owned oil giant. The project had an output capacity of 2, 60, 000 tonnes of polycarbonate. As a part of their expansion plan, they want an investment of over $1 billion (Dh3.67 billion). Analysts estimate continuous growth in the sector.
The cash ratio, quick ratio, and current ratio are all at healthy levels.
GulfMena estimates the second quarter should witness the same results for Sabic. The oil prices is at present around the $100 and the petrochemical cycle is at its peak with volume additions throughout the year from Yansab, Sharq and Tianjin. The commercial production of Kayan will also help profitability. Sabic’s main market is Asia, China and India. And the demand is increasing as ever.
Sabic’s ownership structure is ideal for the region. The government is sharing the profits of the petrochemical industry with the public through listing a company.? The company also make available more shares in the coming years to finance projects or acquisitions. However, not everyone agree with the attractiveness of Sabic. Credit Suisse reviewed its model and downgraded Sabic to neutral, reducing its target price from 120 riyals to 116 riyals.
Saudi Arabia’s petrochemical exports in April was 31 per cent of the kingdom’s overall non-oil exports, which is valued at 12.3 billion riyals.
Source: Gulf News