The overall outlook for Saudi Arabian equities in Q4 2021 looks to be mostly positive, aided by healthy local economic conditions, according to Al Rajhi Capital research.
For petrochemicals, although the combined earnings may improve in Q4, aided by increased prices amid healthy demand, the sector’s margins may come under pressure, due to lower product spreads on higher feedstock prices.
 
Sabic Agri-Nutrients and Yansab are likely to report healthy growth in earnings on the back of higher prices and better cost efficiencies, while the other petchem coverage companies may witness pressure on their profitability in Q4.
 
As for the hospitals, revenue and profitability are likely to aided by consistently strong utilisation. However, cement companies’ results are likely to be weak during the quarter, due to pressure on volumes and prices on a y-o-y basis.
 
“Further, we expect that shortage of electronic devices due to supply constraints of chips, omicron spread, and change in consumer spending pattern, are likely to impact the retail sector’s top-line on an annual basis,” Al Rajhi said.
 
Moreover, structural changes to subsidy, higher food inflation for end consumers and rising input costs for companies may impact the earnings performance of the food sector sequentially.-

 

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