SAFCO rated ‘neutral’ on weak demand; TP reduced to SAR 125.5

21/06/2015 Argaam

Aljazira Capital said it has recommended a “neutral” rating on Saudi Arabian Fertilizer Co. (SAFCO) with a target price of SAR 125.5 as it expects the company’s annual earnings to decline on weak demand for fertilizers.

 

SAFCO’s net profit is expected to drop 9.3 percent this year to SAR 2.8 billion, compared with last year, Aljazira estimated.

 

The company’s performance should get a boost in Q3-2015 after it launches commercial operations at its SAFCO-5 urea plant, the firm added. However, an increase in urea and ammonia production may raise concerns amid declining demand for fertilizers.

 

Meanwhile, prices of some fertilizers products are expected to rebound, the report added.

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