Itqan Cap says SADAFCO position in market strong, maintains rating at ‘Neutral’

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Saudia Dairy and Foodstuff Co. (SADAFCO) remains in a strong position in key market segments, which provides the company with enough defensiveness to push through the current economic climate, Itqan Capital said in a recent report.

SADFCO is able to provide high dividend yield, despite the current pressures on the company’s margins including expected increase in raw material prices.

The company is not expected to fully pass on the increase in raw materials to consumers, following the increase in value-added tax (VAT) that resulted in weak purchasing power, which would limit profitability during 2021, the report added.

The brokerage reiterated its "Neutral" rating for the stock, reducing its target price to SAR 178 from SAR 178.30.

A "Neutral" rating means that the stock will stay in the range of it value (up/down 10%) in a 52-week period.