Riyadh – Mubasher: Al Rajhi Capital said that Saudi International Petrochemical Company’s (Sipchem) results in the first quarter of this year of SAR 92 million came lower than consensus estimate of SAR108 million and its estimate of SAR 131 million.

The research firm set the company’s price target (PT) at SAR 16.6, with a “Neutral” recommendation.

Key downside risks are represented in further fall in product prices, especially Methanol, increase in price of Butane and ethylene prices, unexpected prolonged shutdowns, and higher than expected expenditures

Al Rajhi noted that the key upside risk is related to the improvement in demand-supply metrics of Methanol.

The research highlighted that as a result for the conversion from the International Financial Reporting Standards (IFRS) from Saudi Organization for Certified Public Accountants (SOCPA), net profit has been revised lower, despite operating income came higher.

“Though migration to IFRS will neither change overall business value of the company nor free cash flows,” the report said.