Earnings Report /
Saudi Arabia

Alhokair: Q4 19 - Margin expansion and positive LFL support results

    Mohamed Tomalieh
    Mohamed Tomalieh

    Associate, Equity Research Analyst

    SNB Capital
    12 February 2020
    Published bySNB Capital

    Al Hokair reported a strong set of CYQ4 19 results, with net income increasing +29.7% yoy to SAR34.4mn. However, adjusting for one-off gains of SAR44mn from the sale of its stake in Riyadh Gallery, net loss stood at SAR9.6mn in CYQ4 19 vs a net profit of SAR26.5mn in CYQ4 18. This compares to our estimates of a net loss of SAR25.8mn. The variance in earnings was mainly due to higher than expected gross margins and lower than expected finance costs.

    We are currently Neutral on Alhokair, with at PT of SR25.0. We believe the third consecutive positive LFL growth following two years of declines is a key positive. The stock trades at a CY2020f PE of 16.7x vs sector PE of 19.4x.