Apple firmly on course for $1 trillion valuation, say analysts

Chase Thilleman receives a high five from an Apple employee as he is first in line to buy the Apple iPhone X at the new Apple Michigan Avenue store along the Chicago River on Friday, Nov. 3, 2017, in Chicago. (AP Photo/Charles Rex Arbogast)
Updated 03 November 2017
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Apple firmly on course for $1 trillion valuation, say analysts

Apple Inc.’s shares hit a record-high on Friday after the tech giant reported a blowout fourth quarter and shrugged off concerns related to the iPhone X, prompting more analysts to put a trillion-dollar valuation on the company.
The stock rose as much as 3.7 percent to $174.26, briefly breaching $900 billion in market value, amid declines in the broader market. The gains added nearly $32 billion to the company’s market capitalization.
The Cupertino, California-based company also forecast a strong holiday quarter ahead, which will include the iPhone X that started selling on Nov. 3.
“We see iPhone X unlocking pent-up iPhone upgrades, especially in China, driving more than 20 percent iPhone unit growth and a revenue and earnings beat in 2018,” analyst Katy Huberty on Morgan Stanley said.
The glass-and-steel $999 phone appeared to have brought back the frenzy associated with iPhone launches — long lines formed outside Apple stores in Asia as fans flocked to buy the new phone.
The company will make 30 million iPhone X units during the current quarter, Nomura Instinet analysts estimated, allaying production worries related to the phone.
Apple said on Thursday it expects first-quarter revenue of $84 billion to $87 billion, at the high end of analysts average expectations of $84.18 billion, according to Thomson Reuters I/B/E/S.
“We – and many others – had feared that guidance could be weaker, reflecting only 9 weeks of the flagship iPhone X and limitations on supply,” Bernstein analyst Toni Sacconaghi said.
At least 13 brokerages raised their price targets on the stock, with Citigroup making the most bullish move by raising its price target by $30 to $200.
Of the 37 analysts that track the stock, as per Thomson Reuters data, 31 had a “buy,” or higher rating. None had a “sell.”
With the latest brokerage actions, at least nine Wall Street analysts now have target prices that puts Apple’s market value above $1 trillion. Drexel Hamilton’s Brian White is still the most bullish among Apple analysts tracked by Thomson Reuters, raising his target price further to $235.
Apple’s fourth-quarter results underscored the company’s ability to drive growth not just on iPhones, but across its range of products, analysts said.
The company’s suite now includes five different iPhone models, the iPad, the Mac and the Apple Watch as well as its fast-growing services.
Apple said it sold 46.7 million iPhones in the fourth quarter ended Sept. 30, above analysts’ estimates of 46.4 million, according to financial data and analytics firm FactSet. Mac and iPad sales too were above the estimates of most analysts.


SABIC prepares to meet investors to offer bond

Updated 4 min 52 sec ago
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SABIC prepares to meet investors to offer bond

  • The Kingdom’s petrochemical giant will be meeting investors in London, New York, Los Angeles and Boston from Sept. 25
  • SABIC has also confirmed the appointment of BNP Paribas and Citigroup as global coordinators on the sale

LONDON: Saudi Basic Industries Corp. (SABIC) is preparing to offer its dollar-denominated unsecured bond to the global market with investor meetings due to start this week.
The Kingdom’s petrochemical giant will be meeting investors in London, New York, Los Angeles and Boston from Sept. 25, according to a filing on the Saudi stock exchange on Tuesday.
The Saudi company is likely to be keen to tap into the heightened international interest in the Kingdom’s financial markets following the lifting of some restrictions on foreign investors’ activities at the start of the year.
SABIC has also confirmed the appointment of BNP Paribas and Citigroup as global coordinators on the sale, alongside HSBC Bank, Mitsubishi UFG Securities EMEA and Standard Chartered Bank acting as joint lead managers, in its Tadawul note.
The proposed issuance has been well-received so far by analysts with ratings agency Moody’s Investor Service assigning an ‘A1’ rating to the proposed senior unsecured notes to be issued by the financial vehicle, referred to as SABIC Capital II, and guaranteed by SABIC itself.
“SABIC’s A1 rating reflects its strong business position in the chemical sector and its ability to weather industry volatility, particularly given its healthy operational cash flows and conservative liquidity profile,” said Rehan Akbar, a senior analyst at Moody’s, in a note on Monday.

 

The bond is anticipated to be used in part to refinance an existing SR11.3 billion ($3 billion) one-year bridge loan raised in January this year to fund the company’s 24.99 percent stake in the Swiss chemical company Clariant, according to the Moody’s note. All regulatory requirements were completed on this acquisition earlier this month.
Cash proceeds from the bond may also be used to repay a $1 billion bond due on Oct. 3, according to Moody’s.
On Tuesday SABIC confirmed that the bond will be used mainly to refinance “outstanding financial obligations” of the company and its subsidiaries.
Analysts at rating agency S&P Global were also upbeat about SABIC’s outlook, with research published on Monday stating that the company has “strong profitability” via its KSA operations and a “strong” liquidity position.
“The debt issuance is helpful for the credit profile in the sense that it extends the company’s debt maturity profile and strengthens its liquidity position,” said Tommy Trask, corporate and infrastructure credit analyst at S&P Global.
The agency currently assigns the petrochemical firm an ‘A Minus’ rating, with a “stable outlook,” which it said reflects its “view on the sovereign as well as its expectations that SABIC will maintain high profitability under current benign industry conditions.”
S&P Global’s report said margins in the global chemical industry will “largely stabilize in 2018 following several years of improvement, attributable to the increase in commodity chemical capacity.”
However, it also warned that a key risk to credit quality is
the trend for mergers and acquisitions within the sector and the “potential negative impact on credit metrics from funding them with debt.”

FACTOID

SABIC operates in more than 50 countries across the world.