Saudi Basic Industries Corp (SABIC) fell after second-quarter profit misses forecasts, with analysts warning revenues are likely to come under further pressure as demand weakens in the second half of 2010.
SABIC dropped SR 2 percent. Its quarterly profit rose 177 percent to SR5.02 billion, but missed a consensus estimate of SR5.6 billion and also declined quarter-on-quarter.
“A recovery in Asian demand had supported petrochemical producers’ margins, but inventories are now well stocked and with global sentiment weakening and product prices expected to fall, demand should also drop,” said a petrochemicals analyst who asked not to be identified.
The petrochemicals index fell 1.4 percent.
Savola Group dropped 2.8 percent after its second-quarter profit fell slightly.
Saudi Arabia’s index fell 0.7 percent to 6,073 points, declining for a sixth trading day.
Emirates Telecommunications Corp (Etisalat) ended lower after its second-quarter profit fell, but Aabar Investments surged for a second day to lift Abu Dhabi’s index.
Etisalat slipped 0.5 percent to AED10.35. Its quarterly profit fell 21 percent.
“Etisalat revenues were in line with expectations, but net income fell short,” said Irfan Ellam, Al Mal Capital telecoms analyst. “We still think the stock offers strong upside.”
Al Mal keeps a buy recommendation on the stock, setting a price target of AED14.66, a 40 percent premium on the current price.
“Du is a factor because we estimate 85 percent of Etisalat’s revenues still come from domestic operations,” added Ellam.
“We would normally expect revenue to increase year-on-year and quarter-on-quarter for companies that are performing well, but the latter was only marginally up by 1.5 percent and that was probably because of more domestic competition.”
Aabar Investments rose 9.6 percent to AED1.72, surging for a second day since the market regulator told the company to increase its buyback offer price to minority investors to AED1.95 per share.
The index rose 0.3 percent to 2,534 points, its third gain in four sessions.
Dubai’s benchmark climbed 0.7 percent to 1,518 points.
National Bank of Kuwait rose to help Kuwait’s index end higher for a first session in three, but the longer-term outlook remains uncertain.
NBK, which reported a 10 percent rise in quarterly profit on Tuesday, climbed 1.8 percent.
Gulf Bank added 1.2 percent but Al Ahli Bank fell 3.9 percent and Boubyan Bank dropped 1.9 percent.
“With current volumes, I think the market is heading lower,” said a Kuwait analyst who asked not to be identified.
“We’re waiting for more earnings and the talk is that banks will announce some good figures although concerns remain over provisions – Kuwait is less transparent than other regional markets and we’re not sure what banks’ exposure was in 2009, let alone this year.”
The index climbed 0.1 percent to 6,501 points.
Qatar’s benchmark also ended higher for a first session in three, rising 0.2 percent to 6,924 points on slight volumes.
Industries Qatar climbed 0.7 percent.
Industrial stocks lifted Oman’s index to a higher close as asset managers bet the sector will not be affected by volatility in commodity prices.
Jazeera Steel climbed 2.5 percent and was the most active stock, accounting for more than a sixth of all shares traded.
Oman Cables Industry jumped 5.8 percent on market talk it will increase production, while National Aluminium rose 2.4 percent.
“There was strong buying from asset managers in the industrial sector,” said Adel Nasr, United Securities brokerage manager.
“They believe sector companies will no longer be affected by the volatility in raw materials prices – copper prices fell in Q2, but Oman Cables’ results were still very good and aluminium prices also dropped, yet National Aluminium also did well and so investors believe Jazeera Steel will follow the same story.”
Oman Cables’ 2010 first-half profit more than quadrupled compared to the corresponding period the year before, according to a statement on the Oman bourse.
The index ended up 0.1 percent at 6,227 points. (Reuters)
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