Aljazira Cap says Al Hammadi Q1 2021 beats estimates, sets target price at SAR 33

Logo of Al Hammadi Company for Development and Investment

Al Hammadi Company for Development and Investment’s Q1 2021 net profit of SAR 35.5 million exceeded AlJazira Capital’s estimates of SAR 31.8 million.

The deviation from estimated net income was due to widening gross profit margin, which accompanied the large increase in revenues, the brokerage firm said in an earnings review.

AlJazira Capital raised its forecast for Al Hammadi’s 2021 net profit to SAR 136.8 million, equivalent to SAR

1.14 per share, supported by the growth of net profit during the first quarter.

“The improvement in capacity utilization at Al-Nuzha Hospital is the key revenue driver for the company,” it pointed out.

Profit margins are expected to gradually improve with stabilization of operations at Al-Nuzha.

On the other hand, it said that the high exposure to receivables from the Ministry of Health puts pressure on working capital requirements, which leads to high debt.

AlJazira Capital maintained its “Neutral” recommendation on the stock, with a target price of SAR 33 per share.