Kayan Drops Most Since July as Loss Disappoints: Riyadh Mover

Saudi Kayan Petrochemical Co. fell the most in six months after quarterly results for the affiliate of Saudi Basic Industries Corp. missed estimates for the eighth consecutive time.

The shares decreased 4.6 percent, the steepest drop since July 15, to 12.45 riyals at the close in Riyadh. The stock was the second-biggest decliner and the fourth most-traded by volume on the benchmark Tadawul All Share Index, which fell 0.7 percent. About 12 million of the company’s shares were traded today, more than three times the three-month daily average.

Saudi Kayan said today its fourth-quarter loss widened to 195 million riyals ($52 million) from 191 million riyals in the year-earlier period as costs rose. That missed estimates for losses of 50.3 million riyals at NCB Capital and 28 million riyals at Securities & Investment Co. The Jubail, Saudi Arabia-based company has posted quarterly losses since the fourth-quarter of 2008, according to data compiled by Bloomberg. They missed estimates the past eight quarters, the data show.

The selling pressure was driven by the “frustrating results,” Mohammed Al-Omran, financial analyst and president of the Gulf Center for Financial Consultancy in Riyadh, said by e-mail. “Given the fact that the company is enjoying subsidized feedstock” it should be generating quarterly profits of at least $2 million, he said.

‘Sluggish’ Prices

Saudi Kayan shares tumbled 30 percent last year as slower global economic growth reduced demand for products from Saudi Basic, the world’s largest petrochemicals maker, which owns 35 percent of Kayan. That compares with a gain of 6 percent for the Tadawul and a decline of 6.8 percent for Sabic.

Saudi Arabian Fertilizer Co., in which Sabic holds a 43 percent stake, said yesterday its fourth-quarter profit dropped 10 percent due to lower urea prices. Sabic unit Yanbu National Petrochemical Co. said net income for the three months ended Dec. 31 declined 4 percent.

Petrochemical companies will “suffer from sluggish product prices and weakening demand from the emerging markets in Asia,” Al Rajhi Capital said in a report Sept. 29. Still, Saudi petrochemical companies should outperform global peers helped by a “feedstock cost advantage,” the report said. Saudi Kayan trades at a 2013 estimated price-to-earnings ratio of 13 times, compared with 14 times for the Dow Chemical Co., the biggest U.S. chemical company.

One analyst recommends investors buy the shares of Saudi Kayan while seven have a hold rating on the stock and five say to sell, according to data compiled by Bloomberg.

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