Riyadh – Mubasher: Herfy Foods’ announcement of a profit of SAR 49.68 million ($12.33 million) in Q2-16 came in line with Al Rajhi Capital Research’s expectations of SAR 48.6 million, according to a new report on the stock.
Herfy’s profits were up 7.39% year-on-year in Q2-16, according to the company’s bourse filing on Monday.
“Revenue grew 7.1% year-on-year to SAR 278 million (our estimate SAR 281 million) primarily driven by new store roll-outs, which is negating the impact of lower LFL sales,” the research firm said in a statement on Wednesday.
It added that revenue in Q2-16 was affected by lower average sales during the month of Ramadan, which fell mostly in June 2016 vs. partial impact last year.
“Gross margin declined 120bps year-on-year (our estimate: 60bps decline) due to higher than estimated impact of fuel and electricity costs, and also due to new store roll-out costs,” the report stated.
It added that new restaurant openings for Herfy will remain the primary growth driver over the next few quarters.
Al Rajhi Capital has maintained its target price of SAR 77 per share, “pending release of detailed financials. However, due to stock price appreciation, we rate the stock Neutral.”
