Al Rajhi Capital maintains ‘Overweight’ rating for Aldrees, sets TP at SAR 78/share

Al Rajhi Capital maintained ‘Overweight’ recommendation for Aldrees Petroleum and Transport Services Co., at a target price (TP) of SAR 78/share.

The brokerage firm expects Aldrees to achieve 22% return on shareholders' equity in 2021.

Aldrees is presently focusing on the recovery and improvement of economic activities represented in the reopening of schools and the gradual rise in the performance levels of Umrah and Hajj.

This is estimated to lead to higher demand of gasoline in the FY2021, the report added.

The fourth quarter is projected to be better than the last two quarters, as people have gained more confidence in producing COVID-19 vaccines.

Now, the majority of employees work from their offices, go to cafes and malls. In addition, the traffic on roads has also increased compared to the previous quarter, which bodes well for gasoline players.

The company has an expansion plan to open over 200 fuel stations over the next four to five years, as the new level of margins have made the business very attractive.

Aldrees intends to gain market share by increasing its presence, Al Rajhi Capital highlighted.