Tasnee
Tasnee 3Q2015 – First Look
Suspend
Suspending Coverage
October 20, 2015
Expected Total Return Price as of Oct-19, 2015
SAR 13.18
Upside to Target Price
--
Expected Dividend Yield
--
Expected Total Return
--
Market Data 52 Week H/L
SAR 34.10/12.25
Market Capitalization
SAR 8,816 mln
Enterprise Value
SAR 28,031 mln
Shares Outstanding
668.9 mln
Free Float
55.7%
12-Month ADTV (mln)
2.804
TASI Weight
0.54%
Reuters Code
2060.SE
Bloomberg Symbol
NIC AB
1-Year Price Performance 110
Tasnee posted a massive SAR (296) million net loss for the 3rd quarter with management hinting at further pessimism going forward. This is the third consecutive quarter where the Company has posted a net loss. Due to lack of information (particularly regarding the ongoing restructuring at the Company) we are temporarily suspending coverage on the stock and removing our target price and our forecasts. We shall study detailed accounts as they become available and contact management to get a clear understanding of what is in store for the immediate future. Gross margins dip to 11% Revenues have been reported at SAR 3.6 billion for the third quarter, down -36% Y/Y and 13% Q/Q. Gross margins have come in at just 11.1% versus 21.1% last year and even lower than 19.7% in 2Q2015. Business troubles The titanium dioxide business has continued to give Tasnee trouble in 3Q as well with TiO 2 prices depressed and demand also not very strong. Fixed cost ethane comprising majority of the feed stock for the petrochemical segment has resulted in lower margins as polyethylene prices are down -33% Y/Y for the quarter. Extraordinary charges through the year The Company has already suffered extraordinary charges related to hedging and derivative contracts at one of its subsidiaries and has also booked an impairment charge for non-current assets. This is besides the restructuring expenses that the Company is incurring and which management estimates will continue until next year (2016). Withdrawing forecasts and target price Unsurprisingly, the stock has taken a massive beating at the Tadawul. Until Tasnee comes out with clear guidance with regards to restructuring and business segments outlook, we are suspending coverage on the stock and removing our target price. Our forecasts are also being withdrawn.
100 90 80
70 60 50
O N D
J
F M A M
NIC
J
J
TASI
A
S O
TPCHEM
Source: Bloomberg TASNEE Oct-19-2015
13.18
TASI 7,765
TPCHEM 5,371
Key Financials
Total Change 6-months
(..44)%
(1.41)%
(1.4.)%
1-Year
(..4.)%
(414.)%
(4.44)%
2-Year
(..44)%
(444)%
(414.)%
FY December 31 (SAR mln)
2014A
2015E
2016E
2017E
Revenue
18,693
--
--
--
Gross Profit
4,612
--
--
--
Net Profit
1,071
--
--
--
EPS (SAR)
1.60
--
--
--
Net Margin
6%
--
--
--
DPS (SAR)
1.00
--
--
--
Payout Ratio
3Q2015 SAR (mln)
Actual
RC Forecast
Gross Profit
401
756
62%
--
--
--
Net Profit
(296)
18
ROAE
6%
--
--
--
EPS (SAR)
(0.44)
0.03
ROAA
2%
--
--
--
EV / Revenues
1.7x
--
--
--
EV / EBITDA
7.0x
--
--
--
P / CFPS
3.0x
--
--
--
P/E
11.4x
--
--
--
Muhammad Faisal Potrik [email protected] +966-11-203-6807
Yasser bin Ahmed [email protected] Riyad Capital is licensed by the Saudi Arabia +966-11-203-6805 Capital Market Authority (No. 07070-37)
Stock Rating
Strong Buy
Buy
Hold
Sell
Not Rated
Expected Total Return ≥ 25%
Expected Total Return ≥ 15%
Expected Total Return < 15%
Overvalued
Under Review/ Restricted
For any feedback on our reports, please contact [email protected]
Disclaimer The information in this report was compiled in good faith from various public sources believed to be reliable. Whilst all reasonable care has been taken to ensure that the facts stated in this report are accurate and that the forecasts, opinions and expectations contained herein are fair and reasonable. Riyad Capital makes no representations or warranties whatsoever as to the accuracy of the data and information provided and, in particular, Riyad Capital does not represent that the information in this report is complete or free from any error. This report is not, and is not to be construed as, an offer to sell or solicitation of an offer to buy any financial securities. Accordingly, no reliance should be placed on the accuracy, fairness or completeness of the information contained in this report. Riyad Capital accepts no liability whatsoever for any loss arising from any use of this report or its contents, and neither Riyad Capital nor any of its respective directors, officers or employees, shall be in any way responsible for the contents hereof. Riyad Capital or its employees or any of its affiliates or clients may have a financial interest in securities or other assets referred to in this report. Opinions, forecasts or projections contained in this report represent Riyad Capital's current opinions or judgment as at the date of this report only and are therefore subject to change without notice. There can be no assurance that future results or events will be consistent with any such opinions, forecasts or projections which represent only one possible outcome. Further, such opinions, forecasts or projections are subject to certain risks, uncertainties and assumptions that have not been verified and future actual results or events could differ materially. The value of, or income from, any investments referred to in this report may fluctuate and/or be affected by changes. Past performance is not necessarily an indicative of future performance. Accordingly, investors may receive back less than originally invested amount. This report provides information of a general nature and does not address the circumstances, objectives, and risk tolerance of any particular investor. Therefore, it is not intended to provide personal investment advice and does not take into account the reader’s financial situation or any specific investment objectives or particular needs which the reader may have. Before making an investment decision the reader should seek advice from an independent financial, legal, tax and/or other required advisers due to the investment in such kind of securities may not be suitable for all recipients. This research report might not be reproduced, nor distributed in whole or in part, and all information, opinions, forecasts and projections contained in it are protected by the copyright rules and regulations.
Riyad Capital is a Saudi limited liability company, with commercial registration number (1010239234), licensed and organized by the Capital Market Authority under License No. (07070-37), and having its registered office at Al Takhassusi Street, Prestige Building, Riyadh, Kingdom of Saudi Arabia (“KSA”). Website: www.riyadcapital.com
Suspend
Suspending Coverage
October 20, 2015
Expected Total Return Price as of Oct-19, 2015
SAR 13.18
Upside to Target Price
--
Expected Dividend Yield
--
Expected Total Return
--
Market Data 52 Week H/L
SAR 34.10/12.25
Market Capitalization
SAR 8,816 mln
Enterprise Value
SAR 28,031 mln
Shares Outstanding
668.9 mln
Free Float
55.7%
12-Month ADTV (mln)
2.804
TASI Weight
0.54%
Reuters Code
2060.SE
Bloomberg Symbol
NIC AB
1-Year Price Performance 110
Tasnee posted a massive SAR (296) million net loss for the 3rd quarter with management hinting at further pessimism going forward. This is the third consecutive quarter where the Company has posted a net loss. Due to lack of information (particularly regarding the ongoing restructuring at the Company) we are temporarily suspending coverage on the stock and removing our target price and our forecasts. We shall study detailed accounts as they become available and contact management to get a clear understanding of what is in store for the immediate future. Gross margins dip to 11% Revenues have been reported at SAR 3.6 billion for the third quarter, down -36% Y/Y and 13% Q/Q. Gross margins have come in at just 11.1% versus 21.1% last year and even lower than 19.7% in 2Q2015. Business troubles The titanium dioxide business has continued to give Tasnee trouble in 3Q as well with TiO 2 prices depressed and demand also not very strong. Fixed cost ethane comprising majority of the feed stock for the petrochemical segment has resulted in lower margins as polyethylene prices are down -33% Y/Y for the quarter. Extraordinary charges through the year The Company has already suffered extraordinary charges related to hedging and derivative contracts at one of its subsidiaries and has also booked an impairment charge for non-current assets. This is besides the restructuring expenses that the Company is incurring and which management estimates will continue until next year (2016). Withdrawing forecasts and target price Unsurprisingly, the stock has taken a massive beating at the Tadawul. Until Tasnee comes out with clear guidance with regards to restructuring and business segments outlook, we are suspending coverage on the stock and removing our target price. Our forecasts are also being withdrawn.
100 90 80
70 60 50
O N D
J
F M A M
NIC
J
J
TASI
A
S O
TPCHEM
Source: Bloomberg TASNEE Oct-19-2015
13.18
TASI 7,765
TPCHEM 5,371
Key Financials
Total Change 6-months
(..44)%
(1.41)%
(1.4.)%
1-Year
(..4.)%
(414.)%
(4.44)%
2-Year
(..44)%
(444)%
(414.)%
FY December 31 (SAR mln)
2014A
2015E
2016E
2017E
Revenue
18,693
--
--
--
Gross Profit
4,612
--
--
--
Net Profit
1,071
--
--
--
EPS (SAR)
1.60
--
--
--
Net Margin
6%
--
--
--
DPS (SAR)
1.00
--
--
--
Payout Ratio
3Q2015 SAR (mln)
Actual
RC Forecast
Gross Profit
401
756
62%
--
--
--
Net Profit
(296)
18
ROAE
6%
--
--
--
EPS (SAR)
(0.44)
0.03
ROAA
2%
--
--
--
EV / Revenues
1.7x
--
--
--
EV / EBITDA
7.0x
--
--
--
P / CFPS
3.0x
--
--
--
P/E
11.4x
--
--
--
Muhammad Faisal Potrik [email protected] +966-11-203-6807
Yasser bin Ahmed [email protected] Riyad Capital is licensed by the Saudi Arabia +966-11-203-6805 Capital Market Authority (No. 07070-37)
Stock Rating
Strong Buy
Buy
Hold
Sell
Not Rated
Expected Total Return ≥ 25%
Expected Total Return ≥ 15%
Expected Total Return < 15%
Overvalued
Under Review/ Restricted
For any feedback on our reports, please contact [email protected]
Disclaimer The information in this report was compiled in good faith from various public sources believed to be reliable. Whilst all reasonable care has been taken to ensure that the facts stated in this report are accurate and that the forecasts, opinions and expectations contained herein are fair and reasonable. Riyad Capital makes no representations or warranties whatsoever as to the accuracy of the data and information provided and, in particular, Riyad Capital does not represent that the information in this report is complete or free from any error. This report is not, and is not to be construed as, an offer to sell or solicitation of an offer to buy any financial securities. Accordingly, no reliance should be placed on the accuracy, fairness or completeness of the information contained in this report. Riyad Capital accepts no liability whatsoever for any loss arising from any use of this report or its contents, and neither Riyad Capital nor any of its respective directors, officers or employees, shall be in any way responsible for the contents hereof. Riyad Capital or its employees or any of its affiliates or clients may have a financial interest in securities or other assets referred to in this report. Opinions, forecasts or projections contained in this report represent Riyad Capital's current opinions or judgment as at the date of this report only and are therefore subject to change without notice. There can be no assurance that future results or events will be consistent with any such opinions, forecasts or projections which represent only one possible outcome. Further, such opinions, forecasts or projections are subject to certain risks, uncertainties and assumptions that have not been verified and future actual results or events could differ materially. The value of, or income from, any investments referred to in this report may fluctuate and/or be affected by changes. Past performance is not necessarily an indicative of future performance. Accordingly, investors may receive back less than originally invested amount. This report provides information of a general nature and does not address the circumstances, objectives, and risk tolerance of any particular investor. Therefore, it is not intended to provide personal investment advice and does not take into account the reader’s financial situation or any specific investment objectives or particular needs which the reader may have. Before making an investment decision the reader should seek advice from an independent financial, legal, tax and/or other required advisers due to the investment in such kind of securities may not be suitable for all recipients. This research report might not be reproduced, nor distributed in whole or in part, and all information, opinions, forecasts and projections contained in it are protected by the copyright rules and regulations.
Riyad Capital is a Saudi limited liability company, with commercial registration number (1010239234), licensed and organized by the Capital Market Authority under License No. (07070-37), and having its registered office at Al Takhassusi Street, Prestige Building, Riyadh, Kingdom of Saudi Arabia (“KSA”). Website: www.riyadcapital.com
