Riyadh-Mubasher: Al Rajhi Capital continued with its 'Overweight' rating on Shaker, setting the price target at SAR 24.4.
The company posted a mixed set of financial results for the fourth quarter of 2015. Reported revenue grew 6.4% which is exactly in line with estimates, pointing to healthy performance even in a seasonally weak quarter, Al-Rajhi Capital said in a recent report.
However, increase in cost of sold goods dented gross margin, which fell to 18.9% versus the research firm's estimate of 22.1%.
Furthermore, opex (selling, marketing and admin expenses) increased at a faster pace than revenue which resulted in operating loss of SAR 19 million compared with estimate of SAR 0.2 million profit, the report issuer said.
Performance of the associate LG Shaker was also below estimates, with share of its profits at SAR 1.4 million for Q4 compared with SAR 10.9 million a year earlier.
Lower-than-estimated operating profit and weak performance of the associate LG Shaker led to a net loss of SAR 17.8 million in this quarter compared with estimate of SAR 14.2 million profit (consensus: SAR9.6 million profit).
"However, we are positive on Shaker’s prospects for the long term, being the leading AC manufacturer in the kingdom, strong brand equity and regulations focused on new models of energy efficient air conditioners," the research firm said.
