Riyad Capital kept its neutral rating on Ades Holding (SASE:2382) as it took note of the drilling services company's first-quarter earnings report.
Ades Holding reported a 22% annual rise in its net profit to 236 million riyals during the quarter, with revenue increasing 63% year over year to 2.39 billion riyals. Both were in line with Riyad Capital's estimates of 242 million riyals and 2.20 billion riyals, respectively.
"Although we recognize strong results, with Y/Y double-digit growth across the income statement for ADES, the most informative data point is KSA revenue, which declined -5% Y/Y to SAR 854 mln, despite Shelf-related additions (+4 in KSA) and three rig resumptions in-quarter. This validates our view that the regional disruption is structurally weighing on KSA activity. The second most important data point we highlight is management's reiteration of FY2026 EBITDA guidance of SAR 4.50-4.87 bln, while they also flagged additional 2Q pressure should regional conditions persist," analysts said in a first look note. Riyad Capital expects the company to reach the lower end of its guidance range, citing the management's confidence and geographical diversification.
The Saudi Arabian stock's price target of 21 riyals was also maintained.