Itqan Capital starts Almarai coverage with ‘neutral’

Itqan Capital has initiated coverage of Saudi Almarai with a “neutral” rating, setting the stock’s target price (TP) at SAR 52.90, the investment firm said in a recent report.

The dairy and juice producer is expected to post a net income of SAR 1.77 billion and SAR 1.95 billion in 2019 and 2020, respectively.

Almarai’s growth drivers include increased reliance on the poultry segment and strong financial position.

On the other hand, major risks are weak affordability and an increase in the cost of production.

Almarai is likely to be affected in the short-term by significant changes in the food sector, but will be able to recover soon.

In addition, the company’s decision to import its alfalfa needs from foreign countries and in foreign currency will make it more vulnerable to FX rates and shipping costs, the report issuer added.