Jarir's Q2 beats estimates on margin improvements, says Falcom

Jarir Marketing Co.’s net profit of SAR 162 million for the second quarter 2018 came ahead of Falcom Financial Services and consensus estimates, the research firm said in a report on Tuesday.

The 10.1 percent year-on-year (YoY) rise in the bottom line was supported by growth in retail sales in the electronics division and an increase in profit margins of few divisions due to efficient product management.

According to the report, Jarir is "well-placed to absorb the market share shift to organized retailers, supported by new store rollouts."

"As major players such as Apple and Samsung launch new models during the July–September period, we expect the electronics segment to perform better in the upcoming quarter. This should translate into better top- and bottom-line growth in the coming quarters," it noted.

However, Falcom warned that Amazon’s recent entry in the Middle East market with the acquisition of Souq.com is likely to accelerate the expansion of e-commerce in the region and may "pose risk to Jarir’s long-term margins."

The consultancy maintained its "neutral" recommendation on Jarir, but revised the target price upwards to SAR 186.5 per share.