Large cap Saudis main drag in Riyadh in­dex fall

The Star Early Edition - - BUSINESS REPORT / INTERNATIONAL - Ce­line Aswad

DIS­AP­POINT­ING sec­ond-quar­ter re­sults from large cap Saudi Ara­bian com­pa­nies were the main drag on the lo­cal in­dex yes­ter­day, while neigh­bour­ing bourses were mostly weak.

The Riyadh in­dex fell 0.8 per­cent as the largest petro­chem­i­cal maker Saudi Ba­sic In­dus­tries (SABIC) lost 1.3 per­cent af­ter it re­ported a sec­ond-quar­ter net profit of 3.71 bil­lion riyals ($989.3 mil­lion), be­low an­a­lysts’ es­ti­mates of 4.6 bil­lion riyals and down by a quar­ter from the year ago pe­riod.

The profit fall stemmed from weaker per­for­mance at its iron and steel unit, said chief ex­ec­u­tive Yousef al-Benyan at a press con­fer­ence in Riyadh.

The drop in de­mand for steel was sea­sonal, driven by the Mus­lim hol­i­days of Ra­madaan and Eid, Benyan said, adding the com­pany would try to re­duce ex­penses and in­crease pro­duc­tion.

Jumped

Shares in Alawwal Bank shed 4 per­cent af­ter the coun­try’s old­est bank re­ported a 40 per­cent drop in sec­ond quar­ter net profit to 322 mil­lion riyals. NCB Cap­i­tal and EFG Her­mes had fore­cast a bot­tom line of 369 mil­lion riyals and 368.6 mil­lion riyals re­spec­tively.

The bank said its op­er­at­ing ex­penses jumped 48.4 per­cent be­cause of higher im­pair­ment charges for credit losses, de­pre­ci­a­tion and amor­ti­sa­tion, and higher rent ex­penses.

Most other banks have re­ported earn­ings with mixed re­sults.

The third largest telecom­mu­ni­ca­tions com­pany, Zain Saudi, sank 5.8 per­cent to 8.83 riyals in very heavy trade af­ter the com­pany re­ported a net profit of 8 mil­lion riyals, sig­nif­i­cantly be­low an­a­lysts’ es­ti­mates of 34.2 mil­lion riyals.

An­a­lysts at Al­ra­jhi Cap­i­tal said that to jus­tify Zain’s val­u­a­tion at cur­rent lev­els – ex­clud­ing yes­ter­day’s drop – the com­pany would need to main­tain a high growth tra­jec­tory with im­prov­ing mar­gins “over

The drop in de­mand for steel was sea­sonal, driven by the Mus­lim hol­i­days of Ra­madaan and Eid

and above first quar­ter lev­els”. Al­ra­jhi’s fair value for Zain is 9.5 riyals and it has a “neu­tral” rat­ing on the stock.

Shares in Saudi Ce­ment dropped 0.6 per­cent to 50 riyals af­ter re­port­ing a sec­ond-quar­ter net in­come of 94 mil­lion riyals, de­clin­ing by al­most twothirds from last year’s re­sult and well be­low an­a­lysts’ es­ti­mate of 131 mil­lion riyals.

Shares of the largest med­i­cal in­surer BUPA Ara­bia rose 0.3 per­cent af­ter its net profit rose by 9 per­cent in the sec­ond quar­ter from the prior year pe­riod.

In the United Arab Emi­rates, Abu Dhabi’s in­dex edged up 0.2 per­cent as Dana Gas, the most traded stock, swung 1.6 per­cent higher. Dubai’s in­dex closed near flat as 17 shares rose and 10 de­clined. – Reuters

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