Cairo – Mubasher: MubasherTrade has downgraded its rating for Misr Fertilizers Production Co (Mopco) to Sell/Moderate Risk from Buy/Moderate Risk with the same price target (PT) of EGP 111.33 per share.

Global urea prices are likely to grow, on which the fertilizer producer is forecast to record a price-earnings ratio (P/E Ratio) of 9.8x and enterprise value/earnings before interest, taxes, depreciation, and amortization EBITDA of 5.8x, according to a recent report by MubasherTrade.

The Egypt-based firm has reported its preliminary results for 2017 with earnings of EGP 674.8 million, compared to EGP 709.9 million a year earlier, the report added.

The company’s annual clean earnings did not match with MubasherTrade’s estimates of EGP 1.36 billion by 35% “on the back of booking deferred taxes during the year in relation to the translation of ENPC's USD-denominated financial statements to EGP”, the report highlighted.

Furthermore, tax expense amounted to EGP 1.28 billion, which implies an unusual effective tax rate of 65% that should be normalised next year, the report noted.

Revenues soared 212% year-on-year to EGP 7.40 billion, slightly lower than MubasherTrade’s estimates of EGP 8.11 billion.

The research firm attributed the increase in Mopco’s revenues to “suboptimal utilization rate for ENPC's production lines, resulting from the partial malfunction in the ammonia trains”.