Falcom maintains ‘neutral’ recommendation on SAFCO; lowers TP to SAR 74

Falcom Financial Services has maintained its ‘neutral’ recommendation on Saudi Arabia Fertilizers Co. (SAFCO), and has lowered the target price of the stock to SAR 74.

The brokerage firm noted in the Q3 earnings review that SAFCO’s top line was largely impacted by lower selling prices as result of decline in global urea and ammonia prices.

“The supply of urea is currently in excess and prices are likely to remain subdued. This will overall have negative impact on the product prices,” the brokerage maintained.

The report however added that the launch of commercial operations at SAFCO 3 plant will enhance energy utilization, and boost annual production capacity of ammonia by 100,000 metric tons per year.