Jefferies commenced its coverage of Borouge (ADX:BOROUGE) with a hold rating and a price target of 2.50 Emirati dirhams, citing "limited" share price catalysts.
"Borouge benefits from access to low-cost feedstock and a new asset base with operational flexibility. Key catalysts, including the BGI tender offer and B4 plant injection, have been pushed further out. ADNOC has levers to make Borouge's investment case more attractive - delay feedstock price increases, plant de-bottlenecking and more favourable terms for B4. But, given the lack of clarity, we initiate at Hold. Borouge trades broadly in line with its peers," the research firm said in its report on chemicals and fertilizers companies in the Middle East and North Africa released Tuesday.
Analysts noted that United Arab Emirates-based Borouge's key products are oversupplied globally and the company is expected to face constraints on feedstock as the Strait of Hormuz continues to be closed.
Borouge's exports were also "severely impacted" by the closure of the waterway and the suspension of its plant operations after being damaged by falling debris amid the US-Iran conflict. The polyethylene and polypropylene producer's share price volatility, however, has been the lowest among industry peers during the conflict.