Saudi Industrial Investment Group’s (SIIG) bottom-line in 2Q22 decreased by 43.8% YoY to SAR 284.2 mn, below our estimate of SAR 363.0 mn. The decline in the bottom line was mainly due to lower-than-expected earnings from joint ventures. Aromatics Distribution Company (group’s share 50%) almost reported nil earnings during the quarter compared to SAR 41 mn reported in 1Q22. Saudi Polymers Company (group’s share 65%) reported a net income decline of 19.1% QoQ, led by a fall in product prices and an increase in feedstock prices. Share of income from Gulf Polymers Distribution Company (group’s share 65%) declined by 78.7% QoQ compared to SAR 87 mn reported in 1Q22. Despite some increase in the share of net income from Saudi Chevron Phillips Company (group’s share 50%) and Jubail Chevron Phillips Company (group’s share 50%), the decline in the share of net income from other joint ventures in 2Q22 has impacted our annual net income forecast. The net income was further impacted due to increased general and administrative expenses and finance income in 2Q22 resulting from acquiring the remaining 50% of Petrochem. Corporate actions: Petrochem acquisition: On April 10, 2022, SIIG acquired the remaining 50% of Petrochem not owned by SIIG by way of a share exchange offer, following which SIIG’s number of shares increased from 450 mn to 754.8 mn. Dividend: SIIG’s board of directors approved a cash dividend of SAR 0.75 per share (7.5% of par value per share) for 1H22. This is higher by 50% compared to 1H21. Valuation and risk: Post 2Q22 earnings, we revise downward our bottom-line estimate on SIIG for FY22 by 34.9%, due to unfavorable product price dynamics amid falling crude prices on recessionary fears and due to higher than expected increase in operating expenses resulting from the 100% acquisition of Petrochem in 2Q22. After adjusting the bottom line and accounting for changes in valuation, we arrive at our revised target price of SAR 24.9 per share compared to SAR 31.7 per share. We retain our previous rating of Hold on the stock. The performance in 2H22 is expected to mellow down compared to 1H22 in the backdrop of a looming slowdown in the global markets. The FY22 EPS estimate is at SAR 1.48 vs. SAR 2.27 earlier. Currently, the stock trades at 11.1x P/E and 9.1x EV/EBITDA, based on our FY23 estimates. The downside risks to our valuation include weaker than expected economic activities and consumer demand owing to the slowing in overall economic activities. Key upside risks to our valuation include a rise in product price, lower feedstock cost, improved demand, and higher utilization levels.