Sunday, Jul 03, 2011
0741 GMT [Zawya Dow Jones]--EFG Hermes expects a lackluster performance for Middle East & North Africa petrochemicals in 2Q 2011 due to weaker margins, while it sees strong margin expansion for fertilizer stocks. "We expect to see the strongest earnings growth Q-o-Q at Safco [on higher urea prices], Sipchem [higher acetyls prices], and Sahara [driven by the start of its Al Waha PP plant]." Says current valuations overestimate risks of higher feedstock costs in Saudi Arabia, but underestimate the likelihood of a cyclical upturn over the ethylene value chain post-2011. "We prefer stocks with low risks to feedstock costs, high operating leverage, and capacity growth. Industries Qatar, Yansab and Sabic are our top picks."
(nikhil.lohade@dowjones.com)
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
03-07-11 0742GMT
