Aug. 5 (Bloomberg) -- Saudi Industrial Investment Group climbed to the highest since May after Riyad Capital started coverage of the investor in petrochemicals projects with a buy recommendation.
The shares of the seventh-largest petrochemicals company in Saudi Arabia by market capitalization rose 1.9 percent to 21.95 riyals at the close in Riyadh, the highest since May 30. Riyad Capital set a price estimate of 29 riyals. Sahara Petrochemical Co., which was also started with a hold recommendation, gained 2.2 percent to 13.95 riyals. The stocks pushed the Tadawul All Share Petrochemical Industries Index 0.3 percent higher, trimming the drop in the Tadawul All Share Index to 0.1 percent.
Saudi Industrial Investment, or SIIG, “derives strength from its long-standing partnership with Chevron particularly in terms of plant operations,” analysts including Muhammad Faisal Potrik and Kamal Al-Aithan said in today’s report. “Although petrochem startup was delayed by a few months, its commercial operations from June will boost gross margins to 25 percent next year and double revenues this year as it benefits from fixed feedstock.”
SIIG last year said it set up a joint venture with Arabian Chevron Phillips Petrochemical Co. with a capital of 150 million riyals ($40 million). The company said at the time it expected the joint venture to develop a number of conversion projects with an estimated investment cost of about 2 billion riyals.
The Riyadh-based company may post a 60 percent increase in profit this year to 846 million riyals, according to the mean estimate of four analysts on Bloomberg. Three analysts excluding Riyad Capital have a buy rating on the stock, while one has a hold rating.
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