Riyadh- Mubasher:Aljazira Capital Research updated its recommendation to neutral on Saudi Arabia Fertilizers Co.(SAFCO)with a lower price target (PT) of SAR 61.10/share indicating a potential upside of 3.4%.
The research unit said it expects SAFCO to post net income of SAR 1.292 billion (SAR 3.10 EPS) for 2016, to record a decline of 39.3% y-o-y influenced by higher feedstock cost and low level in product price.
In 2015, SAFCO proposed a DPS of SAR 6 with payout ratio of 117.4% and a yield of 7.3%.
Aljazira Capital said it expects SAFCO to reduce its dividend payment to SAR 3 DPS (5.1% D/Y) in 2016 owing to a decline in operating cash flow.
SAFCO saw cash & equivalent of SAR 1.7 billion in the first quarter of 2016,along with zero debt in the balance sheet makes the company flexible to maintain a payout ratio above 95%.
