Saudi Fransi Capital initiates coverage on Ma’aden with "Hold" rating

Saudi Fransi Capital launches research coverage on Saudi Arabian Mining Company (Ma’aden) with a "Hold" recommendation and a 12-month target price of SAR 32.50. Weak commodity prices are expected to lower revenues by -18% for second half of 2015, while rising depreciation will hurt earnings by -22% for full-year 2015. SFC sees debt repayment challenges ahead if commodity prices remain subdued for an extended period. An agreement with auto manufacturers to establish parts production and assembly in KSA may be a near-term catalyst for the stock. Wa’ad Al Shammal is expected to commence production in 2017 which can boost revenues by 23% and place Ma’aden among top 5 phosphate producers in the world.