Albilad Capital affirms ‘neutral’ rating on Farm Superstores

Albilad Capital maintained its “neutral” rating on Saudi Marketing Co. (Farm Superstores), and kept the target price unchanged at SAR 24.

The company’s inventory level is significantly high, accounting for about 37.4 percent of revenues in 2017 (around 9 percent for Abdullah Al Othaim Markets Co.), which indirectly affects the cash flows from operations and debt levels, Albilad Capital said in an earnings note on Wednesday.

Farm Superstore received a six-month binding offer from chairman to buy its wholly-owned Lebanese subsidiary, Saudi Marketing and Trading Company, which owns and operates Beirut Mall.

“The divestment of Beirut Mall, taking into consideration the financial indicators of the subsidiary, is forecasted to bode well for Farm Superstores with the possibility of directing the proceeds to repay a part of the debt load, which amounted to SAR 548 million in 2017,” the brokerage firm added.

The company increased the number of superstores to 73 by the end of 2017 compared to 64 stores a year earlier. According to its annual board report, Farm Superstores is planning to open nine superstores and two Adventure World branches this year.