Muted revenue growth led to earnings miss
The company posted revenue of SAR 571.8mn for 4Q22 exhibiting a decline of 18% and 37% on a QoQ basis and YoY basis, respectively, below our estimate of SAR 687.9mn. The decline in revenue could be attributed to falling in sales prices amid macro concerns on recession and Russia – Ukraine war impacting production activities in Europe.
Fall in profitability
The decrease in the sales price and increase in feedstock prices resulted in gross profit declining by 87% on a QoQ basis and 88% on a YoY basis to SAR 152mn while an operational and net income basis, gains turned into losses to SAR 22mn and SAR 67.5mn, respectively.
Maintain target price
We had downwardly revised our target price on the company through our investment note of dtd.13th Nov.22 where we had accounted for rising feedstock prices and tepid demand situation. We intend to maintain our TP on belief that the upcoming quarters will be positive for the company amid improved macro.