Jarir Q4 profit beat estimates; TP raised to SAR 183: SICO

Jarir Marketing Company’s strong earnings of SAR 252 million for Q4 2017 beat SICO Investment Bank’s estimates by 14 percent, mainly driven by pre-VAT sales, launch of iPhoneX and market share gain in the mobile phones segment, SICO said in an earning’s review.

SICO maintained a “neutral” rating with a short-term “positive” bias on Jarir, but raised the target price to SAR 183 per share from SAR 161 per share.

The Tadawul-listed retailer plans to expand to over 60 stores by 2019 from the current 50 and enhance its e-platform with a revenue expectation of SAR 200 million for 2018 – up from SAR 100 million in 2017, the report said.

“We also expect Jarir to be one of the key beneficiaries from the flow driven rally in Saudi Arabia (post likely inclusion of Tadawul in MSCI and FTSE indices) and the company’s stock should continue to command a premium to its peers led by its high return ratios, strong brand, effective customer service and close long-term relationship with its vendors,” SICO said.

Meanwhile, Jarir’s Q4 operating profit at SAR 246 million was above SICO’s forecast, boosted by higher sales and strong margins, the report said. Gross margin of 15.3 percent was slightly higher than the bank’s projection of 14.8 percent.

The Q4 revenue of SAR 2 billion was also above SICO’s estimates by 11.4 percent as Jarir opened new showrooms and ramped up promotional activities, leading to higher sales.