Zoujaj’s Q2 misses estimates on higher associate income: Riyad Cap

The National Company for Glass Industries’ (Zoujaj) net profit of SAR 37.6 million in Q2 has beaten Riyad Capital’s estimates of SAR 11.9 million on a surprise surge in associate income, the brokerage said in a review.

Zoujaj recorded non-operational income of SAR 34.8 million that quadrupled from Q1 2017, and mainly included share of associate income from Gulf Guard, Guardian RAK and SANLEC.

“We are yet to receive more clarity on the sudden spike in associate income though management announced the same is due to 10 percent increase in investment book, while balance sheet data also confirms 25 percent quarter-on-quarter (QoQ) growth in investments to SAR 365 million in this quarter versus SAR 291 million in Q1 2017,” the report said.

Meanwhile, revenue of SAR 26.5 million missed the brokerage’s estimates of SAR 28.8 million, likely due to seasonality trends in Ramadan.

Gross profit of SAR 7.2 million also missed the expectations of SAR 8.9 million, while gross margins of 27.2 percent contracted by 50 basis points year-on-year (YoY) and declined 310 bps QoQ.

Riyad Capital maintained its “Neutral” rating on the stock but raised the target price to SAR 22 per share from SAR 20.88 per share.

“We might revisit estimates if this trend sustains in the coming quarters,” the firm said.