Al-Rajhi upgrades rating on Herfy, gives new TP

Mubasher: Al-Rajhi Capital Research upgraded its rating on Herfy Food Services to 'Overweight', setting a new target price (TP) at SAR 71.4 per share, which implies 13.4% upside from current levels, according to a Sunday's report.

In the third quarter, Herfy was backed by strong like-for-like sales (LFL) performance of extant stores, a report by Al-Rajhi Capital Research showed on Sunday.

In the last 8 quarters, Herfy's stores jumped to 98 ones with strong margin at 30% compared with an estimate of 28, which suggests benefits from lower input costs.

"While we had factored in the positive impact from revenue run rate normalizing post Ramadan (and also some benefit from Hajj season), the strong revenue growth suggests that even the new stores are ramping up much faster and yielding results soon after roll-outs", said the research agency, adding "The earnings beat was primarily led by stronger than expected revenue and gross margins."

The company achieved a 3.85% year-on-year increase in profits in the third quarter of 2016 to SAR 58.83 million ($15.7 million) from SAR 56.65 million ($15.1 million) in the same quarter last year.

Mubasher Contribution Time: 23-Oct-2016 07:12 (GMT)
Mubasher Last Update Time: 23-Oct-2016 07:12 (GMT)