Riyadh-Mubasher: MubasherTrade maintained its positive outlook and 'Buy/Low Risk' rating on Saudi retailer Jarir Marketing Co. (JMC), backed by the company's key growth drivers.
The research firm forecasts an insignificant downward change in its estimates on the recent subsidies cut and lower-than-expected revenues.
"However, we still maintain our positive outlook on Jarir's future growth and price target of SAR 241.34/share (an expected total return of +77.1%), mainly due to showroom spread across Saudi Arabia and GCC with ambitious plans to double its store," the report issuer said.
JMC announced on 27 December 2015 the opening of a new showroom in Jeddah with more than SAR 23 million investments, bringing the total number of its total showrooms to 40 (34 in Saudi Arabia and 6 in GCC countries).
The retailer had a plan to open seven new showrooms in 2015; however, only four new showrooms were opened, in addition to the re-opening of one showroom. The four new showrooms, which were opened in 2015, came in line with expectations by opening three showrooms in Saudi Arabia and one in the GCC region.
However, the research firm had expected the fourth showroom would have been inaugurated at the beginning, not the end of Q4-15. "Hence, we expect a slight decline in retail sales/showroom in Saudi Arabia in 2015".
The remaining two showrooms will be opened in 2016, as announced by the company. "This also matches our conservative assumption that the company will achieve 75% of its earlier target to double the number of showrooms from 36 (at the end of 2014) to 72 over the next five-six years," MubasherTrade said.
Jarir recorded net earnings of SAR 208 million during the fourth quarter of 2015, a fall of 4.7% from SAR 206 million in the year-ago period.
Full-year net earnings increased 11% year-on-year from SAR 745 million
