Riyadh – Mubasher: Saudi Fransi Capital said, in a report issued Sunday, that earnings of Saudia Dairy & Foodstuff Co. (Sadafco) for the fourth quarter of 2015 beat its estimates by 37%. It maintained a ‘Buy’ recommendation on the stock.
Sadafco reported headline net profit of SAR68 million for Q4, up 126% year-on-year and 26% quarter-on-quarter, said the report issuer.
The company’s revenues rose by 11% year-on-year to SAR496 million, which came in-line with the research firm’s estimate.
“In our view, the solid earnings beat was a function of 1/ lower cost of raw materials (milk powder) as the base effect becomes more visible in earnings (until Mar ’15, Sadafco was negatively affected by high cost of milk powder imported at close to peak prices) and 2/ lower admin & marketing costs that decreased 8% q/q. In all, EBIT margin came in at a solid 14.5% vs. SFC estimate of 10.7% and well ahead of the historical normalized 12% mark,” said Saudi Fransi Capital.
