Earnings Report /
Saudi Arabia

Almarai: Weak results on lower than expected margins; Neutral

    Mohamed Tomalieh
    Mohamed Tomalieh

    Associate, Equity Research Analyst

    SNB Capital
    20 January 2020
    Published bySNB Capital

    Almarai reported a weak set of Q4 19 results, with net income declining -15.9% yoy to SAR312mn. This compares to the NCBC estimates of SAR403mn. We believe the variance and yoy weakness in earnings is mainly due to lower than expected gross margins on higher alfalfa and other feedstock costs. However, this was partially offset by lower than expected opex.

    We are currently Neutral on Almarai, with at PT of SAR47.7. We believe continued strong performance of the poultry segment, driven by the HORECA channels is a positive. However, the higher feedstock costs and weakness in the juice segment remain the concern. The stock trades at a 2020f PE of 23.5x.