SABIC Agro-Nutrients Revenues to increase by 158% in 2021, Al-Rajhi Capital predicts

Al-Rajhi Capital forecasts that SABIC Agricultural Nutrients Company profits to rise to SR3.34 billion by the end of 2021, an increase of 158.1% over the previous year’s profits of SR1.29 billion, and that they will continue to rise in the following Year 2022, reaching SR3.83 billion.

Al-Rajhi Capital upgraded its recommendation for SABIC Agricultural Nutrients company from neutral to overweight, while also lifting the target price for the stock to SR160, up from SR115, in its previous recommendation.

According to Al-Rajhi Capital, urea prices increased significantly this month, reaching their highest levels in several years, with India likely to announce new offers in the coming weeks, pushing urea prices higher, while the epidemic has resulted in global food price increases (+40% over the past 15 months).

In terms of the cost-push aspect, gas and coal costs are skyrocketing, as is urea pricing.

So far in September, urea prices have increased by 30%, but the company’s stock price has only increased by 10%.

Despite a planned shutdown, Al-Rajhi Capital expects the company to make significant profits in 2021 (mostly in the second half of 2021).

This should result in enhanced cash flow creation, allowing for higher dividend payments.

In the second quarter of this year, the company generated revenues of SR1.839 billion, which fell short of estimates of SR2.05 billion, due to lower sales than planned. However, a better-than-expected improvement in cost efficiency resulted in a jump in total profits.

Total operational profit increased to SR836 million in the second quarter of this year, compared to SR760 million predicted, thanks to lower income tax provisions.