Aljazira Capital maintains Al Othaim’s “overweight” recommendation

Aljazira Capital said net income of Al Othaim Markets of SAR 75.4 million was above its and market estimate of SAR 52.2 million and SAR 50.1 million, respectively.

“Othaim’s overall results exceeded our expectations. We expect the sales momentum seen in Q3 2019 to continue in Q4, driven by the opening of new stores,” the brokerage firm said in a research note.

“The Y/Y increase was due to growth in sales driven by the opening of six stores during the quarter and margin expansion attributed to efficient cost control,” it added.

Aljazira Capital projected an increase in store count to 357 at the end of FY2022 from 276 in Q3 2019.

“The company’s strategy of continued expansion augurs well, enabling it to increase its market share and capitalizing on the growth opportunity. Revenue growth is well supported by stable margins, driving net profit growth,” it noted.

The brokerage firm maintained its “Overweight” recommendation, with a TP of SAR 88.60/share.