Saudi Fransi Capital (SFC) has initiated its research coverage on Saudi Arabian Mining Company (Maaden) with a "Hold" recommendation and a 12-month target price of SR32.50.

Weak commodity prices are expected to lower revenues by -18 percent for second half of 2015, while rising depreciation will hurt earnings by -22 percent 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 the Kingdom 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 percent and place Maaden among top five phosphate producers in the world.