BofA Keeps Sipchem at Buy Amid Improving Outlook for Methanol; Price Objective Trimmed
BofA Global Research reiterated its buy rating on Sahara International Petrochemical Co. (SASE:2310), d/b/a Sipchem, supported by an improvement in outlook for methanol and volume growth expectations on the back of debottlenecking projects."We believe 2026 should mark a bottom in earnings driven by: 1) improving sales volumes with the Strait [of Hormuz] potentially re-opening in 2027, 2) relatively steady to improving outlook for Sipchem's key product, methanol, driven by favourable supply demand balances. 3) Debottlenecking projects over the next 12-18 months, should help improve volumes by 30% across PP (Al-Waha expected to be complete by 4Q26) and EVA (ethylene vinyl acetate expected to complete by 2027)," analysts said in a report on chemicals companies in the Middle East and North Africa released Tuesday."However, we remain cautious on our commodity petchems coverage given: the wave of new capacity additions that were expected pre-conflict are likely to start coming through over the medium term. China has been resilient through the crisis supported by feedstock diversification (supported by a mix of naphtha, mixed feed, gas, ethane and coal-based supply) vs peers who rely more on naphtha as feedstock and the country using inventory for demand."Sipchem's 2026 and 2027 EBITDA forecasts were slashed by 21.8% and 19.3%, respectively, as analysts lowered their volumes projections amid the continued closure of the Strait of Hormuz. The stock's price objective was revised to 16.5 Saudi riyals from 18.0 riyals.
