Saudi Fransi Capital has maintained “hold” rating on Saudi Arabian Mining Co. (Maaden), and kept the 12-month target share price at SAR 28.50, reflecting the company’s vulnerability to volatile commodity prices.
The brokerage revised down by 12 percent full-year 2016 revenues to SAR 10.4 billion from SAR 11.8 billion and second quarter estimates by 14 percent to SAR 2.6 billion.
“We project gradual price recovery across gold, phosphate and aluminum for the remainder of the year but continue to see topline weakness,” according to the research note.
Saudi Fransi Capital believes that inclusion of mining in Vision 2030 and new board appointments could, in general, help Maaden, but weak commodity prices and rising borrowing cost remain a concern.
“We believe coordination between large industrial entities will be streamlined that could potentially result in enhanced shared services functions,” Saudi Fransi Capital added.
“While these developments create an interesting dimension to Maaden story, we believe tangible benefits will not be immediate.”
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