Rising output, falling sales
Argaam’s market data quotes Advanced shares at 22.08 riyals, up 2.13%. TASI ended Sunday’s session down 0.15%. The fundamental condition I watch at Advanced is how quickly output reaches customers and becomes revenue. CEO Mamdouh AlAmri said third-quarter production rose 12% year on year while sales volume fell 20%. That gap makes the earnings contribution from higher output depend on delivery and revenue recognition. Faster progress through those stages could support a more favorable outlook for the shares.[1], [2]
Management expects fourth-quarter production to stay near third-quarter levels and sales to rise through carried-over inventory if September’s logistics and margin improvements continue. The company’s expectations baseline rests on getting existing output to customers. Roughly 70% of third-quarter production was sold; quarter-end inventory reached about 40% of average production. That inventory could allow sales to grow faster than new output. The mechanism requires shipments to advance and sold goods to meet the conditions for revenue recognition.[1]
From inventory to revenue, from prices to margins
About half the inventory had been sold by the end of September but remained classified as goods in transit. AlAmri expects those volumes to enter revenue at the end of the fourth quarter once recognition criteria are met. Progress on deliveries could therefore turn previously produced and sold goods into revenue. Selling prices and input costs together shape the earnings effect. Third-quarter selling prices fell 16% from the previous quarter and propane prices fell 31%; AlAmri said margins held steady. If input costs become heavier relative to selling prices, better deliveries could make a smaller contribution to earnings.[1]
October’s increase of roughly 100 dollars per tonne in net selling prices came with a broadly similar rise in propane prices. When the input becomes more expensive alongside the product, the margin remains tied to the balance between those prices. Financing and depreciation expenses also continue to weigh on results. This is where I assess Advanced’s outlook: converting carried-over inventory into revenue could support sales, and a stable selling-price/input-cost balance could strengthen that revenue’s earnings contribution. If deliveries improve while input costs become heavier, the same sales increase could yield a weaker result. Those are the operating conditions behind my reading of the positive price signal.[1]