Mubasher: MubasherTrade Research (MTRe) said that Agthia Group’s profits in the second quarter of 2016 reported an 18% growth YoY to AED 77.9 million, in line with estimates (-0.3%) and consensus (+4.9%), according to a recent report.
The report added that the growth of Agthia’s earnings was mainly driven by 17% YoY higher total revenues to AED 559 million, in line with MubasherTrade estimates (+2.8%) and consensus (+3.4%).
“EBIT margin declined by 67 basis points YoY, reaching 13.6% (vs. MTRe of 14.3%) due to 37% YoY growth in selling, general & administrative expenses, representing 21% of total revenues vs. 18% a year ago,” the report added.
MubasherTrade believes that “The water segment will be the main driver for business growth on the back of the acquisition of Al Bayan, which strongly contributed to strong double-digit increase in water revenues, in addition to the joint venture (50/50 partnership) with Kuwait's Al Wafir Marketing Services Company to establish a water bottling plant in Kuwait to commence operations by H2 2017."
The research unit said that Agthia’s results are neutral, maintaining the recommendation of Hold/Moderate Risk rating and price target (PT) of AED 8.33/share (+10% upside).
