Mubasher: Al-Rajhi Capital Research kept its 'Neutral' recommendation on Al Marai with the same target price of SAR 60, according to a report on Thursday.
Al Marai reported a strong margin performance in third quarter of 2016 that is likely to continue going forward, according to a report by Al-Rajhi Capital Research.
Management commentary was in-line with the research firm's expectations post Q3 results.
"Management mentioned the operational efficiency program is yielding desired results and that there is further headroom to improve efficiencies", the report indicated.
The company's Q3 gross profits reached SAR 1,557.9 million, compared with SAR 1,446.5 million in Q3-15 and SAR 1,590.9 million in Q2-16.
Further, the input costs are likely to stay "benign" in the coming few quarters, the report indicated, explaining that the impact of "higher forage costs may start in the coming few quarters, however, it is unlikely to change the overall margin trajectory, which is likely to remain strong in our view."
The firm expected revenue growth to be slightly impacted if some premium segments such as fresh juice or poultry are affected by the slowdown of consumer spending
"We have built the above into our estimates post Q3 results and we maintain our target price of SAR60 (SAR59 previously) and Neutral rating", the research firm concluded.
