Riyad Capital maintains ‘hold’ rating on Almarai, TP at SAR 53

Riyad Capital maintained its “hold” rating on Almarai Co., with a target price of SAR 53 a share.

“We expect muted sales growth for the first quarter at +5.5 percent when Almarai announces Q1-2016 financials as compared to double digit topline growth in the first quarter of the two preceding years,” it said in an earnings preview.

The brokerage expects the dairy producer’s net profit to increase 8 percent to SAR 294 million in the first quarter as it anticipates margins to expand with the lag effect of lower oil prices still flowing through.

Fresh dairy and juice would continue to lead revenues but some slowdown for the past two quarters is seen. While processed cheese has been stagnant in terms of growth the sequential improvement in the poultry segment is expected to continue, Riyad Capital said.