Alujain released its 1Q18 financial results, showing net profit of SAR62mn (+116% Y-o-Y, +6.35% Q-o-Q). We note that 4Q17 included a one-off capital gain of SAR16mn; adjusting for this, earnings would have been up 46% Q-o-Q. The company stated operating profit at SAR63mn (+115% Y-o-Y, +48% Q-o-Q), while gross loss came in at SAR0.11mn (vs. gross profit of SAR1.64mn in 1Q17, SAR1.38mn in 4Q17). The company reported sales at SAR5.07mn during 1Q18, -21% Y-o-Y. 
 
We highlight that NATPET, Alujain’s 57.4%-owned PP operation and the main earnings generator for the company, reported revenues for the quarter of SAR537mn in 1Q18, up 37% Y-o-Y and 16% Q-o-Q. While PP prices were higher Y-o-Y (+16%) and Q-o-Q (+6.5%), this does not fully account for the revenue increase, implying that volumes saw a substantial boost as well. NATPET’s net income came in at SAR122mn, more than doubling Y-o-Y (+116%) and c50% higher Q-o-Q. Overall, a stellar set of numbers for Alujain, with the company showing two consecutive quarters of very strong numbers and operations showing a massive improvement from the previous year. We highlight that annualising Alujain’s 1Q18 earnings would imply a P/E for the name of c8.2x, well below regional peers, which are currently trading in the 12-15x range. 

Yousef Husseini