Equity Analysis /
Saudi Arabia

BinDawood Holding: Earnings Call Summary – Q1 22

  • BinDawood is positive about its Haramain stores’ performance after the removal of Covid-19 restrictions & Ramadan season

  • The company is facing challenges to procure certain imported products due to ongoing supply-chain issues

  • Average basket size dropped to SAR103.5 in Q1 22 compared to SAR113.7 of Q1 21 while it increased from SAR100.1 in Q4 21

SNB Capital
24 May 2022
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Financial performance

  • Total revenue increased by 4.5% yoy (+11.2% qoq) to SAR1.18bn in Q1 22 mainly driven by Ramadan and Back to School seasons. Also, the company’s Haramain stores benefited from the lifting of Covid-19 related restrictions.

  • Sales of BinDawood stores increased by 13.8% yoy (+18.5% qoq), benefiting from the removal of Covid related restrictions. Danube stores’ sales improved by 0.9% yoy (+8.2% qoq) driven by Back to School and Ramadan seasons.

  • Revenue of 8 Haramain stores (located in Makkah and Madinah) increased by 191.6% yoy (23.8% qoq) and accounts for 9.4% of total revenue in Q1 22.

  • Gross profits increased by 2.8% yoy (+42.7% qoq) to SAR383.7mn in Q1 22 vs SAR373.4mn in Q1 21 driven by higher sales.

  • Gross margins dropped to 32.6% in Q1 22 vs 33.2% in Q1 21 due to the additional cost of the marketing campaigns.

  • Adjusted EBITDA decreased by 8.1% yoy to SAR181mn in Q1 22 while adjusted EBITDA margins dropped to 15.4% in Q1 22 vs 17.6% in Q1 21. The decline in EBITDA and margins was driven by the increase in operating expenses due to costs associated with the new stores opened during 2021.

  • Net profits increased by 5.4% yoy to SAR65.5mn in Q1 22 while net margins reached to 5.6% vs 5.5% in Q1 21. The increase in net income and margins were driven by a one-time rent relief of SAR17.1mn received in Q1 22 from landlords of Haramain stores.

  • Adjusted CFO increased by 59.4% yoy to SAR418mn driven by reduction in working capital.

  • Trade working capital decreased by 27.1% yoy to 437mn in Q1 22, driven by increase in payables due to increased purchases to meet the demand during Ramadan season.

  • The company generated FCF of SAR295mn (up 79.1% yoy) driven by the reduction in working capital by SAR158mn.

  • The company remains debt free with a healthy cash balance of SAR779mn at the end of Q1 22.

  • Operational performance

  • At the end of Q1 22, BinDawood’s total store count stood at 78 of which 51 are hypermarkets and 27 are supermarkets.

  • LFL growth for BinDawood stores is 13.8% yoy (18.5% qoq) and 1.0% yoy (8.4% qoq) for Danube.

  • The company is planning to open 5 new stores (including Bahrain and Danube Riyadh) in 2022.

  • The average ramp-up period of the stores is 1-3 years depending on the location.

  • The management plans to open 5 express stores in H2 22, of which 4 at Haramain High Speed Railway and 1 at Jeddah Airport.

  • The company plans to open dark stores in the main cities of Saudi through the acquisition of AITC.

  • Customer count in Q1 22 increased to 11.2mn vs 9.8mn in Q1 21 and 10.4mn in Q4 21.

  • Average basket size dropped to SAR103.5 in Q1 22 compared to SAR113.7 of Q1 21 while it increased from SAR100.1 in Q4 21.

  • The increase in footfall and basket size is driven by resumption of sales campaigns and increased pilgrims.

  • The company’s recently introduced new omnichannel customer loyalty programme has been well received with more than 1mn customer registrations.

Others

  • The management stated that the rent relief received during the Q1 22 are related to Covid-19 period and these will not be repeated in the coming quarters.

  • BinDawood is positive about its Haramain stores’ performance as the removal of Covid-19 related restrictions and Ramadan season will increase customer’s footfall.

  • The company expect to continue its inventory management (similar to last year) to maintain the inventory at optimum levels.

  • The company is facing challenges to procure certain imported products due to ongoing supply-chain issues, but it doesn’t have any major impact on the overall operations.

  • The management said that it is not passing the full impact of inflation on prices to customers. The impact is shared across the customers, suppliers, and the company.