Saudi dairy producer Almarai Co.’s Q3 2019 earnings of SAR 581.2 million came in-line with analysts’ estimates and market consensus, Aljazira Capital said in a research note.
“Continued improvement in macroeconomic sentiments, the company’s market share and strong recovery in bakery and poultry segments has mitigated the impact on the company,” the note said.
Although the company was able to gain market shares in some categories, Aljazira Capital noted that Almarai’s margins in FY20/21 may be under pressure due to additional utilization of imported alfalfa.
“However, the company’s ability to continue focusing on cost and gaining market share are the key support for future performance,” it further added.
“Moreover, continued performance improvement in the poultry segment, food services and recovering bakery segment are the key support for higher operating efficiency,” Aljazira noted.
The firm maintained “Neutral” recommendation on Almarai, with a target price of SAR 53 per share.
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