SABIC

Cyclical petrochemical trough is closer to inflection than consensus suggests; Aramco-SABIC integration unlocks feedstock and capex synergies through 2027.

SABIC enters 2026 at the back end of one of the deepest petrochemical down-cycles in a decade. We argue the cycle is closer to its turn than current consensus EBITDA estimates imply. Three forces support the call: (1) Chinese polyethylene and polypropylene capacity additions are decelerating after the 2022–2025 build-out, with effective utilization improving in second-half 2026; (2) the Aramco integration — completed for capital-allocation purposes in late 2024 — has begun to translate into harder capex discipline and preferential feedstock arrangements (notably ethane allocation through 2030); and (3) the Specialty Chemicals segment continues to grow EBITDA double-digits, providing through-cycle earnings ballast. Our SAR 78.00 PT uses a sum-of-the-parts approach: 6.5x EV/EBITDA on Petrochemicals at mid-cycle, 9.0x on Specialty, and a holding company discount of 8%. Key catalyst: Q3 2026 PE/PP spread inflection.