Operating performance in line with our estimate, except for gross profit
The company has reported revenue of SAR 4,206.6mn for the 4Q22 which is in line with our estimate of SAR 4,061.6mn, and in the process recorded a 4% increase on a YoY and a decline of 5% on a QoQ basis. The increase in revenue could be attributed to the increase in the average selling prices and sales volume.
However, the company posted a decline in gross profit by 29% to SAR 1,942.4mn which is also below our estimate of SAR 2,518.2mn. The reasons of the sharp decline in gross profit could be assigned to the prices of feedstocks remaining elevated during the quarter.
The operating profit of the company for the quarter at SAR 2,189mn came in line with our estimate as selling and administrative costs of the company increased as revenue of the company increases.
The company reported a net profit of the company for the quarter at SAR 2,102.4mn which is in line with our estimate of SAR 2,126.8mn despite recording a 10% decline on a QoQ basis and 24% on a YoY basis. The increase in direct costs and SG&A weighed down on the net profit which gets reflected in contraction in margins against our estimates.
Maintain target price
Considering mixed results of increasing the company’s product prices and the production volume and rising prices of feedstocks, we maintain our target price, expecting growth drivers to stay positive in the upcoming short-to-medium terms.