Itqan Capital maintains 'Neutral' on SADAFCO, raises TP to SAR 181/share

Logo of Saudia Dairy and Foodstuff Co. (SADAFCO)

Itqan Capital maintained 'Neutral' rating on Saudia Dairy and Foodstuff Co. (SADAFCO) and raised the share target price (TP) from SAR 178 to SAR 181 per share.

SADAFCO maintained the revenue momentum despite the challenging fiscal year, the brokerage said in a recent report, adding that the company's margins saw pressures during 2021, mainly due to non-recurring costs.

It expects SADAFCO's resilience and market position will help it rebound to pre-pandemic levels during the fiscal year ending in March 2022, despite further slowdown in demand.

The company's topline performance bottomed out in Q4 2020; however, SADAFCO is likely to see stronger revenues quarter-on-quarter (QoQ), despite the price competition and value-added tax (VAT).

The brokerage expects the company to post SAR 274 million net profit for the FY 2021/22.

SADAFCO earlier posted SAR 56.1 million net profit for Q4 2020 that ended on March 31, 2021, a drop of 25% year-on-year (YoY), according to data compiled by Argaam.