Jarir Marketing Co. reported a net income of SAR 255.2 million in Q3 2020, missing both Aljazira Capital and market consensus of SAR 341.3 million and SAR 270.3 million, respectively.
The brokerage firm expects margins to remain under pressure in Q4 2020 due to lower sales from the school and office supplies segment and hike in value-added tax (VAT) rate, in addition to higher selling and marketing expenses, given the company’s plan to increase market share.
Revenue is expected to continue to be adversely impacted due to lower sales of school and office supplies, as remote learning would continue in Q4 2020. However, the launch of the new iPhone should boost smartphone sales in the same quarter.
Aljazira Capital lowered its FY20 estimates to SAR 8.22.
In the long term, the brokerage firm believes Jarir’s topline would grow, as it gains market share following its store expansion plans and rise in online sales.
It maintained its recommendation of “Neutral”, setting the target price at SAR 159 per share.
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