Jarir 2018 beats estimates on higher revenue, margins: FALCOM

Jarir Marketing Co.’s (Jarir) net profit increased 10.6 percent year-on-year (YoY) to SAR 960 million in fiscal year 2018, beating the consensus estimate, Falcom Financial Services said in an earnings report.

Revenue rose 6 percent YoY to SAR 7.4 billion in 2018, supported by increased higher sales of smartphones, electronics, IT and other digital products during the year, driven by opening five new showrooms.

Gross profit grew 7.4 percent YoY for the year to about SAR 1.1 billion despite a 5.8 percent YoY increase in the cost of sales.

Gross margin rose by 10.8 basis points YoY in 2018, but fell in Q4on higher cost of sales.

Operating profit improved by 9.4 percent YoY to SAR 914 million on a decrease in operating expenses.

Net profit margins expanded 54.2bps YoY to 13.0% in 2018, despite higher zakat and cost of finance.

In October 2018, Jarir approved a 33.3 percent capital hike and approved dividends of SAR 2.35 per share for Q4 2018.

Jarir’s impressive performance for the year is attributed to adjusting its product mix, Falcom said.

“We expect the launch of new stores and improving like-for-like (LFL) to support revenue growth in the upcoming years,” it added.

Falcom raised the target price to SAR 160 per share, yet maintained a ‘Neutral’ rating on the stock in light of the fierce e-commerce competition which ‘may weigh down margin expansion in the upcoming years.’