Nomura upgrades Saudi's SABIC to 'buy' rating

Brokerage expects ME petrochemical producers to shift focus to Asia in this decade.
Nomura upgrades Saudi's SABIC to 'buy' rating
RATINGS UPGRADE: Nomura has upgraded SABIC on the basis of its
By Gavin Davids
Sun 11 Apr 2010 04:45 AM

In a report focusing on the region’s petrochemical and refining markets, Nomura justified its upgrade of SABIC, as the company has a ‘strongly differentiated low cost base and growth story’, which it said, was built around Saudi Arabia’s industrialisation.

Nomura said: “"We see SABIC as offering good value with a focus on specialty products able to sustain its low cost growth with improving margins to benefit from the recovery in domestic and global chemicals demand."

The brokerage also stated that it would be maintaining its neutral rating on Petrol Rabgih.

In its report, Nomura said: “The company is the lowest cost chemical producer with a refining business unique amongst its peers, but awaiting plant reliability.”

It added that it expected Middle East petrochemical producers to start this decade in a position of strength within the global chemicals sector, as they are less reliant on international companies for capital to fund expansion projects, and are instead shifting focus to gaining access to new technology and customers, particularly in Asia.

As one of the world’s largest petrochemical manufacturers, SABIC is one of the most profitable non oil companies in the Middle East.

70 percent of its shares are owned by the Saudi Arabian government, and the remaining 30 percent are held by private investors from the Kingdom and other countries of the GCC.

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