SICO revises rating on SACO to 'buy'

SICO investment research has upgraded its rating of Saudi Company for Hardware (SACO) from "Neutral" to "Buy" with a target price of SAR 88 per share.

The stock’s rating has been upgraded to ‘Buy’ post stock’s sell-off in recent weeks, said the report, adding SACO stock has underperformed the Tadawul index by 29 percent since 2Q18 results and offers 27 percent upside.

“Due to recent sell-off, SACO’ stock offers a 27 percent upside over the current price (TP SAR 88/share), accordingly, we upgrade our recommendation from “Neutral “to “Buy”, offering a good entry point for long term investors,” noted the report.

Despite a subdued near term outlook for SACO, SICO expects FY19 to be better for the stock led by factors such as, recovery in demand as housing projects’ execution pick up pace; expansion/addition of 3 stores; the new technology line (mobile phones and gaming accessories) addition expected to roll out by end of next year; and benefit from consumer finance facility which SACO has recently started offering its customers.

SICO also expects SACO’s market share to grow from consolidation in the Kingdom.