SABIC Receives “Overweight” Recommendation from Al-Ahli Capital

Al-Ahli Capital has issued a new report on SABIC, recommending an “overweight” position with a target price of 87.3 riyals per share. This target price represents a premium of around 16% compared to the previous day’s closing price of 75.5 riyals.

The recommendation is based on the improving demand and better price dynamics for SABIC’s end products in the petrochemical sector. Despite surplus production remaining a challenge, Al-Ahli Capital believes that companies with a strong budget and diversified portfolio of products and feedstocks will outperform their peers.

SABIC’s strong financial position and diversified portfolio make it the company of choice in the sector, according to Al-Ahli Capital. The company recently announced an 85% year-on-year increase in second-quarter profits, reaching 2.2 billion riyals.

Al-Ahli Capital expects SABIC’s full-year profit to reach 6.1 billion riyals in 2024, followed by 10.9 billion in 2025. This represents a significant improvement compared to the loss recorded in 2023. The company’s future earnings multiple for 2025 is estimated at 20.9 times, higher than the sector average of 13.5 times.