AlJazira Cap begins BinDawood coverage with ‘Neutral’, TP at SAR 117

AlJazira Capital started its coverage of BinDawood Holding Co., with “Neutral” recommendation and a target price of SAR 117 per share.

The increase in demand in the food retail sector due to the coronavirus pandemic reflected positively on BinDawood’s initial public offering (IPO), the research firm said.

It noted that the listed-firm is in a good position to benefit from the increase in domestic consumption, due to better profit margins than its peers. In addition, strategic location of its stores and a vibrant growth strategy will support BinDawood’s earnings performance in the next five years given the current economic and financial environment.

AlJazira Capital expects BinDawood to outperform its peers in the short to medium term, noting that it offers a better investment opportunity due to its efficiency, profitability and value standards.

The company's net profit is expected to increase by 29.8% in 2020 to reach SAR 544 million, while the profits are forecast to decrease by 10.9% to SAR 485 million in 2021.

The “Neutral” recommendation means that, according to Al-Jazira Capital, the stock is trading in a range close to its target price for a period of 12 months, and its price may vary plus or minus 10% from the current price levels during the next 12 months.