24 April 2012 14:37 [Source: ICIS news]
LONDON (ICIS)--HSBC has raised its rating and target price for the shares of petrochemical firm Saudi Industrial Investment Group (SIIG), on an upcoming start-up of a polymers project in the second quarter of 2012, the bank said in a report on Tuesday.
HSBC said SIIG owns a 50% stake in the Saudi Arabian firm National Petrochemical Company (Petrochem), which is developing a ?xml:namespace>
The cracker at Al-Jubail in Saudi Arabia, which has been delayed from the fourth quarter of 2011, is expected to start operations by the end of the second quarter of 2012, with utilisation ramping up to full rates over the course of the second half of the year, it added.
“Apart from its 50% stake in Petrochem, SIIG has two existing business units – Saudi Chevron Phillips (SCP) and Jubail Chevron Phillips (JCP) – which together contributed Saudi riyal (SR) 528m ($141m), or SR1.2 in EPS [earnings per share], in 2011,” said HSBC.
In 2011, SIIG shut down some of its production units for scheduled maintenance work.
“[SIIG’s] 2011 performance included a fourth-quarter maintenance shutdown, however, and we estimate that these units will contribute around SR800m in net income for SIIG in 2012,” it added.
HSBC has upgraded SIIG to an “overweight” rating, from “neutral”, and raised its share target price to SR32, from SR21.
($1 = SR3.75)
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