Al Rajhi Cap says Jarir Q1 2021 revenue beats estimates, revises rating to ‘Overweight’

A Jarir Bookstore branch

Jarir Marketing Co.’s (JMC) Q1 2021 revenue of SAR 2.5 billion exceeded Al Rajhi Capital and consensus estimates’ of SAR 2.3 billion and SAR 2.4 billion, respectively.

The actual revenue topped estimates by a good margin as the demand for mobile, laptop, and non-stationary products grew during the quarter, in addition to new store openings in 2020, Al Rajhi Capital said in a new report.

Furthermore, Jarir’s s new strategy to offer occasional discounts to gain market share and opening new stores in untapped areas provides strong revenue visibility for the near future.

The brokerage expected Jarir to record revenues of SAR 9.98 billion in 2021 and SAR 11.15 billion in 2022.

The key downside risks include a slowdown in consumer spending and further dilution of gross profit margin and re-opening of international travel could lead to a reduction in local consumer spending, which may impact revenue forecast and valuation.

Al-Rajhi Capital revised its recommendation to “Overweight” from “Neutral” for the stock, raising the target price to SAR 231 from SAR 180 a share.

The revision is supported by the company’s plan to open seven new stores in 2021, which will aid in increasing market share and topline growth.