In an interview with Argaam, Advanced CEO Abdullah Al-Garawi stated that the recently announced JV between SK Advanced and PolyMirae to build a new PP plant is set to add value across the company’s South Korean operations. Al-Garawi mentioned that the new JV will utilise propylene feedstock from SK Advanced to produce polypropylene (PP). The utilised propylene will represent c60% of SK Advanced’s total production, which will also provide a guarantee for SK to sell a big chunk of its production at international market prices. Advanced CEO noted that the new PP plant will utilise a LyondellBasell licensed technology, while highlighting that the SK Advanced has financial capability to meet its equity portion of the new project. Based on an earlier release, the total cost of the project is estimated at USD420mn, which will be financed with 60% debt and 40% equity. Finally, Al-Garawi noted that the demand for PP is still robust, as it is estimated to grow at 4-5% annually.

Advanced: SAR53.90 as of 25 Jun. 2018, Rating: Buy, TP: SAR50.50/share, MCap: USD2,829mn, APPC AB/2330.SE