Al Rajhi Cap says Al Hammadi Q3 2020 profit tops estimates, raises TP to SAR 32/share

Al Hammadi Co. for Development and Investment’s rise in revenue by 13.2% year-on-year (YoY) for Q3 2020 to SAR 249 million exceeded Al Rajhi Capital’s forecasts by 3.2%, it said in a recent report.

The brokerage firm attributed the better-than-expected results to improvement in the performance of the company’s Nuzha branch and higher referrals from Ministry of Health.

Lower finance costs, due to a fall in interest rates aided the overall profitability of the company, in addition to the government initiatives to support the private sector, contributed to reducing staff cost.

Al Rajhi Capital expects Al Hammadi’s net profit to rise to SAR 138 million and SAR 160 million in 2020 and 2021, respectively.

It reiterated its ‘Neutral’ recommendation on the stock, raising its target price (TP) to SAR 32 per share, from SAR 25/share.

The ‘Neutral’ rating implies that the share price to settle at a level between 10% below the current share price and 10% above the current share price on a 12-month time horizon, according to the brokerage firm.