Al Hammadi Company for Development and Investment’s SAR 20 million profit for Q2 2019 has come higher than Al Rajhi Capital’s SAR 16 million estimates, Al Rajhi Capital said in a note.
The brokerage firm said the company’s future is promising and it expects higher margins.
“Al Hammadi has a high exposure to government contracts, which has resulted in receivables at an elevated level,” it said.
“Going forward, we expect improvement in margins mainly due to higher utilization of Nuzha Hospital as it matures. Pharmaceutical segment is likely to continue to be a key revenue driver but with lower contribution in the coming quarters,” Al Rajhi further added.
The firm maintained its “Neutral” rating on the company, and lowered its target price to SAR22 per share from SAR25/share.
“Post Q2 results, we raise our estimates for general and administrative (G&A) expenses and working capital requirements which lowers our TP to SAR22 per share,” it noted.
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