FALCOM expects Almarai to maintain market share in near term, hikes TP to SAR 52

Almarai Co. maintained leadership position in most of its operational segments across Saudi Arabia in 2020 and is likely to hold on to its market share in the near term, FALCOM Financial Services said in a recent report.

The company’s dairy, juice and poultry segments will likely record robust growth in 2020 sales and profit, the report said.

The poultry segment is expected to see stable growth as the company reaps the benefits of capacity expansion in the segment.

However, the bakery segment posted a decline in sales volume as schools remained closed in the second half of 2020, which weighed on the sales of the single-serve range.

The Tadawul-listed firm recorded solid fundamentals with a steady free cash flow due to lower capital expenditure (CAPEX) in 2020.

“A gradual recovery in economic activities and a rebound in consumer demand to pre-COVID19 levels are anticipated to support the company’s profitability in the upcoming quarters. However, rising feed and labor costs and a resumption of the expat exodus on easing of travel restrictions pose key challenges to the company’s operations,” FALCOM noted.

The research firm maintained its “Neutral” rating on the stock, raising the target price to SAR 52 from SAR 51 a share.

The “Neutral” rating means that the fair value is 10% more or less than the stock’s current price.