Riyadh – Mubasher: Jarir Marketing's profits in the third quarter of 2016 beat the estimates of seven research firms, where the average of the expectations reached SAR 193.3 million, while the actual profits rose 13.82%.
Jarir reported a strong set of third quarter's results, with net income increasing 0.7% year-on-year to SAR 220 million, which was higher than the NCB Capital estimates of SAR 195 million.
"We believe the positive surprise came from higher than expected margins, as a result of a change in sales mix towards the higher margin stationery products," NCBC reported.
The company's SAR 1,521 million sales came in-line with the NCBC estimates of SAR 1,490 million, which were attributed to the back-to-school season, the increase in store count from 39 in Q3-15 to 44 in Q2-16.
Gross margins also beat the estimates of SAR 231 million, achieving SAR 253 million which is mainly due to a relative change in sales mix towards the higher margin stationery products, according to the research firm.
NCBC expected that the recent announcement on allowance cuts would negatively impact the retail sector and more specifically companies selling discretionary nature products. However, the extent of the impact remains largely unclear yet.
Jarir third-quarter profits also beat the estimates of Albilad Capital of SAR 180 million, posting SAR 220 million
The research firm noted that the nine-month profit shrank on lower electronic and computers sales as the comparable period coincided with the royal decree to pay additional two-month salary for state employees.
The estimated sales went down 1% to SAR 1,521 million in Q3-16 from SAR 1,536 million for Q3-15. The revenues for 9M 2016 fell to SAR 4,329 million from SAR 4,851 million in the same period of 2015.
Albilad capital expected that the decisions of the Saudi cabinet Council in September 2016 , which trimmed some financial incentives to state employees, will negatively reflect on electronics and computers sales next year.
The research firm gave Jarir Marketing an “Overweight” recommendation, with a fair value of SAR 120.
Moreover, Al Rajhi Capital also announced that Jarir reported Q3 earnings at SAR 220mn which came higher than its estimates of SAR 188 million.
Revenue were against the Al Rajhi's estimates of 4.7% growth and came 1% down at SAR 1,521 million, which is likely due to lower growth in the discretionary segment of computers/ peripherals, electronics and mobiles.
Al Rajhi Capital maintained the overweight rating on Jarir, with new target price stands at SAR99.3.
