SAFCO’s Q4 2018 figures in line with estimates: Al Rajhi Cap

Saudi Arabia Fertilizers Co. (SAFCO) reported net profit of SAR 568.5 million in Q4 2018, slightly below Al Rajhi Capital’s estimates of SAR 601 million and consensus forecasts of SAR 574 million, Al Rajhi Capital said in a note.

SAFCO reported slightly lower-than-expected earnings owing to weaker-than-expected sales volume coupled with lower equity income on account of likely 30-day shutdown at Ibn Al-Baytar, Al Rajhi added.

Urea prices are expected to reach $285/ton (+3 percent over 2018) in 2019. Also, the company has a planned shutdown of 117 days at SAFCO III which could lower H1 2019 earnings by SAR 120 million.

Al Rajhi revised its 2019 earnings estimates downwards to SAR 1.60 billion, from SAR 1.73 billion to factor in SAFCO III plant shutdown.

Al Rajhi reiterated a Neutral rating on the stock with a TP of SAR 82.