Riyadh - Mubasher: Al Rajhi Capital maintained their target price for Al Marai at SAR 61.4 per share, with a neutral rating, according to a recent report.
Al Marai's revenues in the fourth quarter of 2016 came below estimates due to a 2.4% year-on-year decline in sales of its core dairy and juice segment, which was estimated for a 4% growth.
“Despite lower revenue growth, gross margin and operating margin were higher than our estimates, led by lower input costs, and continuing gains in production efficiency and better cost management. This led to operating profits reaching SAR 661.5 million and coming in-line with our estimates,” the report indicated.
Going forward, the key aspects to focus on would be revenue outlook and how much will macro environment and competition impact it, and sustenance of margins given that majority of gains from lower input costs may have already been incorporated in the cost base.
