Bank Hapoalim: Makhteshim Agan write-off to hurt annual net by only $10 million - TheStreet

Bank Hapoalim has reiterated its Buy rating for agrochemicals firm Makhteshim Agan, despite the firm's Sunday announcement it will be writing off $15 to $22 million as a result of the crisis in Argentina.

Analyst Rakefet Levison-Apter set a price target of NIS 10.2 but, despite this reaffirmation of faith, raised the stock's risk rating to High Risk.

The bank noted that the company at this stage does not know whether the write-off is to be effected in Q4 2001 or in 2002 financial results. The firm also said that the final volume of the write-off will be known only in another several months, once it completes negotiations with Argentinean farmers.

The analyst estimates that the effect of the write-off will be less than the estimates provided by the company. The analyst expects that the write-off will hurt annual net profit by $10 million.

Levison-Apter expects that the reports will be affected by positive factors that will partly offset the write-off, such as the strengthening of the Brazilian currency, the real, against the dollar, and the devaluation of the shekel against the dollar. The analyst wrote that a 1% shekel devaluation contributes about $1 million to the net profit.

The bank based its Buy rating on three main growth engines, which it believes are still in force: the opportunity to acquire new products, a possible acquisition of a generic products company, and the firm's continued streamlining.