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Shares of Sabic Agri-Vitamins are anticipated to rise by greater than 50% over the following 12 months due to a restricted fertilizer provide worldwide, in response to Financial institution of America. The corporate, previously generally known as Saudi Arabian Fertilizer Firm, is without doubt one of the largest producers of fertilizers, with an annual manufacturing capability of about 4.5 million tons. The worth enhance over the previous 12 months for pure fuel, a essential uncooked materials, has despatched the price of fertilizers hovering globally , benefiting the Saudi chemical firm’s backside line. Pure fuel costs have greater than doubled to $4 per million British thermal items (MMBTU) over the previous 12 months because of the Russia-Ukraine battle. In distinction, BofA analyst Sashank Lanka stated Sabic Agri-Vitamins pays $1.25/MMBtu for the fuel, owing to its relationship with Saudi petrochemicals firm Sabic, which is a majority shareholder. “Our Purchase ranking is pushed by our expectations of secure earnings momentum over the medium time period,” stated Lanka in a word to purchasers on Jan 3. “We additionally anticipate the urea value curve to steepen, supported by rising fuel costs in EU and Asia together with excessive coal costs,” Lanka added. Though fuel costs have eased since their August peak, analysts anticipate demand to select up in Europe through the winter. “This may occasionally push the fuel costs upwards, protecting strain on European Urea producers and should profit SABIC Agri-Vitamins which has a fixed-cost feedstock,” stated Jassim Al-Jubran, head of sell-side analysis at Aljazira Capital, in a word to purchasers after the corporate’s third-quarter outcomes final 12 months. Sabic Agri-Vitamins reported a rise in internet earnings by 93.3% to 2.3 billion Saudi riyals ($610 million), in comparison with the earlier 12 months. Al-Jubran expects the inventory to rise by 26% to 179 Saudi riyals. Financial institution of America additionally famous that China’s export ban of fertilizers, probably till June 2023, to assist home agricultural consumption with adequate provide at low costs will additional scale back world provide. Whereas U.S. traders can achieve publicity to Sabic Agri-Vitamins via the Franklin FTSE Saudi Arabia ETF , European traders can entry the inventory via the iShares MSCI Saudi Arabia Capped UCITS ETF.
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