Earnings Report /
Saudi Arabia

Shaker: Q4 22 Result Analysis | Weak results on seasonality, higher finance costs

  • Revenues decreased by 7.4% yoy (-10.9% qoq) to SAR210mn and came lower than our estimates of SAR229mn

  • Gross margins expanded by 120bps yoy to 25.4% in Q4 22

  • The company has deconsolidated its statements and re-classified its holding in EMS and listed its shares in NV

Nauman Khan
Nauman Khan

Follow
SNB Capital
13 March 2023
Published bySNB Capital

Shaker reported a weak set of results with a net loss of SAR2.39mn in Q4 22 vs a net profit of SAR8.81mn in Q3 22 and a net loss of SAR3.38mn in Q4 21. We highlight that the company has deconsolidated its statements and divested its holding in EMS (UAE) and listed its shares in NV (Jordan) as held for sale. Therefore, the financials are not completely comparable to previous quarters. In Q4 22, the company reported a topline of SAR210mn, down 7.4% yoy (-10.9% qoq), and is lower than our adjusted topline of SAR229mn.

  • Revenues decreased by 7.4% yoy (-10.9% qoq) to SAR210mn and came lower than our estimates of SAR229mn (Adjusted for the sales of UAE and Jordan businesses). The variance in revenue was driven by lower demand due to seasonality.

  • Gross margins expanded by 120bps yoy to 25.4% in Q4 22. The yoy improvement and variance in gross margins is due to the better product mix of the company.

  • Shaker reported a net loss of SAR2.39mn in  Q4 22 vs a net profit of SAR8.81mn in Q3 22 and a net loss of SAR3.38mn in Q4 21.

  • We highlight that the company has deconsolidated its statements and re-classified its holding in EMS (UAE) and listed its shares in NV (Jordan) as held for sale and hence other heads are not comparable to previous quarters.

  • Revenues for FY 22 came at SAR1.04bn, up 3.44% yoy driven by a robust growth in HVAC solutions segment.

  • Gross profit for FY 22 was SAR237.6mn driven by higher sales and product mix optimization. Consequently, the gross margins improved to 22.9% in FY 22 vs.21.5% in FY 21.

  • Operating income came in at SAR42.4mn, up 15.6% yoy, led by the decrease in impairment loss on trade and other receivables. However, the growth in operating income was partially offset by higher fixed costs. Operating margin for FY 22 stood at 4.07% vs. 3.43% in FY21.

  • Net income for FY 22 increased 19.7% to SAR32.8mn led by higher top line and a decline zakat and tax. Net margin for FY 22 stood at 1.89% vs. 2.52% in FY 21.

Outlook

Based on our last update, we are Underweight on Shaker with an adjusted PT of SAR20.9. Although Shaker is well placed to benefit from the ongoing construction growth, the company is trading at an unjustified premium compared to its peers. The stock is trading at a 2023f P/E and EV/EBITDA of 24.1x and 32.9x vs peer group average of 19.8x and 13.2x, respectively. Due to the deconsolidation, we highlight that we are in the process of adjusting our financial statements.