| Weak operating performance, missed our estimates |
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| The company has reported a weaker set of operating numbers whereby its revenue in 4Q22 fell by 37% on both QoQ and YoY basis to QAR 261.9mn, below our estimate of QAR 403mn. The decline in revenue could be assigned to the reasons of the cautious demand for petrochemicals and Chlor-Alkali amid macro headwinds, lower production volume, and largely elevated feedstocks. | ||||
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| Higher administrative costs, above our estimate |
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| The company witnessed a rise in general and administrative costs to QAR 4.2mn during the quarter to QAR 4.2mn against our estimate of QAR 4.0mn, reflecting higher variable costs. | ||||
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| Net profit fell by 32% QoQ, below expectations | ||||
| The company has reported a dip in net profit by 32% on a QoQ basis and 30% on YoY basis to QAR 296.1mn largely on account of a decline in revenue and a rise in feedstocks and variable costs. | ||||
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| Maintain target price |
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| Asia-pacific is the leading market for the petrochemical industry, and with China re-opening and governments providing production-linked incentives amid the interest-rates cycle peaking up, there appear to be industry tailwinds for the industry in general, and Mesaieed in particular. However, downside risks to valuation could be global economies falling in a recession. | ||||