twitter linkedinfacebookacp contact us

SABIC net income at a record high


SABIC announced its Q2 2011 preliminary results on 16 July 2011 that saw net income hit US$2.15 billion.

The Q2 2011 net income increased 61.5 per cent YoY driven by higher selling prices and increased production, according to the report by the Saudi bank NCB Capital (NCBC).

Q2 2011 net income came in 5.4 per cent higher than estimated

SABIC reported Q2 2011 net income of US$2.1 billion, 5.4 per cent higher than NCBC’s estimate of US$2.05 billion and 14 per cent higher than consensus of US$1.89 billion. The Q2 2011 net income grew 61.5 per cent YoY backed by an improvement in prices for most petrochemical products and growth in production and sales volumes. NCBC argued that the 5.3 per cent QoQ growth in Q2 2011 net income was due to higher petrochemical prices.

Gross and operating income slightly above expectations

SABIC’s Q2 2011 gross income stood at US$4.3 billion, 4.9 per cent higher than NCBC’s expectations. The bank has attributed this to higher than expected selling prices. Operating income in Q2 2011 came in at US$3.5 billion, 4.3 per cent higher than NCBC’s estimate of US$3.3 billion.

Cash dividends of US$1.6 billion for 1H11

SABIC announced a cash dividend of US$1.6 billion for the first half of 2011. This indicates a dividend per share of US$0.5. For the full year 2011E, NCBC expects SABIC to a pay dividend per share of US$0.9.

SABIC’s long term strategy remains intact

SABIC management, in the local media, has reiterated its plans to seek potential acquisitions in the western markets as well as in Egypt. This remains viable due to its strong cash position. NCBC is overweight on the stock with a price target of US$34.2. The stock currently trades at a 2011E P/E of 10.0x.