Jarir Q4 results beat estimates on higher income: Al Rajhi Cap

Jarir Marketing Co.’s net profit of SAR 290 million for the fourth quarter 2018 beat Al Rajhi Capital's estimate of SAR 265 million, the research firm said in a report on Wednesday.

"The earnings beat was likely on the back of higher-than-expected other income and rental income," it added.

The retailer’s revenue rose 6.8 percent year-on-year (YoY) to SAR 2.14 billion, beating the brokerage's estimate of SAR 2.05 billion, driven by growth in sales from smartphones and video games section, and increase in the number of stores.

The company opened two stores in Q4 2018, taking the total number of stores to 55 compared with 50 in Q4 2017.

Gross profit grew slower than revenue to reach at SAR 320 million, but operating profit increased 13.6 percent YoY to SAR 327 million, positively impacted by re-classifying rental income from others income to operating income.  

"Better than expected LFL growth and successful roll out of new stores (5/6 stores for 2019/2020) will spur revenue run-rate and drive operating leverage. Industry consolidation will also help large retailers like Jarir command better supplier terms," the brokerage said.

Al Rajhi Capital maintained its "neutral" rating on the stock, setting the target price at SAR 151.

"Jarir remains one of the best dividend plays in Saudi Arabia with expected FY19 dividend yield at 4.6 percent," the report said.