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RIYADH: Saudi-listed retail, energy, and logistics firms are expected to report positive earnings growth in the fourth quarter of 2023 amid mixed sector outlooks in the market.
According to the latest report by Al Rajhi Capital on equities in the Kingdom, transportation, media and financial services sectors are also anticipated to reflect growth.
The analysis revealed other sectors’ overall performance during the fourth quarter of 2023, including the petrochemicals industry, which is expected to have sustained annual pressure due to weak prices, leading to a decrease in product spread.
Costs followed a mixed trajectory, with continuous declines in main polymer prices. However, some goods, such as methanol, ethylene, and low-density polyethylene, saw slight recoveries while essential feedstock prices rose significantly.
Regarding the construction sector, cement volumes continued declining, registering a year-on-year fall of 10.8 percent in October, followed by a decrease of 7.3 percent in November.
This aligns with the drop in mortgage lending, which has decreased by more than 40 percent year to date as of October 2023.
“We expect the Western region to witness market share competition in Q4 2023 although the Central region might see some stability in prices post a subdued third quarter,” according to a statement in the report.
Furthermore, the analysis suggests that the total net income of the three biggest telecom companies, including stc, Mobily and Zain, is anticipated to have declined by 4.8 percent quarter on quarter in the last three months of 2023.
This is mainly because the industry as a whole, and stc in particular, saw decreased average revenue per user in the fourth quarter, which is consistent with previous trends.
The healthcare sector’s topline is projected to stay roughly flat, as “we estimate peak results occurred in Q3, and there appears to be a shift in seasonality. We anticipate a 0.8 percent sequential improvement in topline, but a 1.9 percent drop in net income,” the report stated.
This is due to margin pressure from Habib’s large hospital openings and increased finance expenses for highly leveraged brands. Revenue growth was estimated to be 6.2 percent year on year, driven by higher utilization and pricing increases.
Following the strong third-quarter results, pharmaceutical companies SPIMACO and Jamjoom confirmed their guidance for 2023.
The growth rate was expected to remain moderate, as the analysis suggested that the revenues for pharmaceutical companies were likely to decrease by approximately 1.7 percent year on year due to seasonal weakness.
According to the report, supermarket and hypermarket chain BinDawood Holding Co. has projected a 44 percent year-on-year growth, reaching SR85 million ($23 million), primarily driven by increased sales from the Harmain stores.
Additionally, during the third quarter of 2023, insurance companies experienced a negative impact on their earnings due to a significant increase in medical claims.
The study forecasted more positive outlooks for the fourth quarter, anticipating fewer claims than in the past.
“However, a rise in claims in the motor business could offset the benefits in the medical business to some extent,” it added.