Saudi Kayan Petrochemical New Feedstock and Deleveraging Update

Goldman Sachs upgrades Saudi Kayan to Neutral from Sell, raising its price target to SAR 6.10 following the confirmation of additional ethane feedstock. The move is expected to drive significant margin improvement and accelerated deleveraging through 2029.

Key Takeaways

• 1.Upgrade to Neutral from Sell based on confirmed increase in ethane gas allocation from 50mscfpd to 80mscfpd.
• 2.The new feedstock is expected to drive a SAR 600mn annualized EBITDA uplift and significantly improve margins.
• 3.Substantial deleveraging is projected, with net debt-to-EBITDA expected to fall from 7.6x in 2025 to 2.2x by 2029.

Table of Contents

• Increased confidence in ability to meet consensus forecasts
• Re-rating potential emerges amid new feedstock and deleveraging
• FCF improvement supports a likely end to multi-year de-rating
• More visibility on deleveraging
• Estimate changes, valuation and risks
• Upside/downside risks
• Global comp sheet

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