SAFCO net income seen to rise 20% in 2019: NCB Capital

Saudi Arabian Fertilizers Co. (SAFCO) is expected to report a 20.1 percent year-on-year (YoY) increase in net income to SAR 2.1 billion in 2019, NCB Capital said in a forecast.

The research firm attributed its projections to a rise in Urea prices, as prices rose by 30.9 percent in Q3 2018 as well as the de-bottlenecking projects that are underway in 2018 and 2019.

NCB Capital also expects SAFCO’s operating rates to increase to 100 percent in 2019 as compared to 98 percent for 2018 and 86.2 percent in 2017.

SAFCO’s de-bottlenecking projects will help margins improve as net margins are seen to reach 50.6 percent in 2019 versus 46 percent in 2018.

The research firm had previously recommended a “Neutral” rating of the stock with a target price of SAR 74.6 per share.