NCB Capital previews Q1 net income and EPS estimates for Saudi compani

06/04/2014 15:31 AST

NCB Capital repors that for the stocks it covers in the Saudi market (representing around 89 per cent of total TASI net income in 2013), the firm expects Q1 2014E net income to record a YoY increase of 13.7 per cent to reach SAR 23.7 billion. NCB Capital expects SABIC’s net income to grow by 9.4 per cent YoY and 16.7 per cent QoQ to SAR 7.2 billion, equivalent to 30 per cent of the total expected net income of the Saudi market.

NCB Capital said the key reasons behind the expected strong YoY growth in Q1 earnings is 1) the 85 per cent YoY increase in net income for STC to SAR 2.9 billion due to the expectation of the sustainability of the cost cutting initiatives and 2) the 16 per cent YoY increase in net income for the Petrochemical sector to SAR 10.2 billion.

The Petrochemicals sector is expected to benefit from higher prices (except fertilizers and EG) and the improvement in operating rates. NCB Capital expects Kayan and Petrochem to report net profits in Q1 2014E compared to net losses in Q1 2013.

The investment bank expects a 2.6 per cent YoY increase in the Banking sector earnings. This YoY growth is mostly driven by a nine per cent increase in NSCI due to a loan growth of 10.1 per cent. lbasis, the Banking sector is expected to increase 18.8 per cent, mostly due to lower expected provisions. Al Rajhi is expected to report a net income of SAR 2.0 billion, down 1.5 per cent YoY but up 30.7 per cent QoQ.

Food and Retail sectors are expected to record a YoY increases in net income of 11.8 per cent and 17.2 per cent, respectively. The food sector growth is led by both Savola and Almarai, where NCB Capital expects YoY net income growth of 12 per cent. The expected growth in the Retail sector is led by new store openings, along with the continued high single digit organic growth.

The firm notes significant one-offs may as usual distort the results.

CPI Financial