Riyadh - Mubasher: Al Jazira Capital said it downgraded its price target (PT) for Halwani Bros to SAR 62.70 per share with a potential upside of 11.5% , while reiterated its "Overweight" recommendation.
The research house attributed the lowering of the company's PT to the slowdown of the sales as it went down 11% due to currency devaluation in Egyptian subsidiary.
Halwani’s sales in 2Q2016 stood at SAR 236.7mn, significantly below Al Jazira Capital's estimates of SAR 262.4 million, and indicating a fall of 11.6% y-o-y and 14.8% Q-O-Q.
Al Jazira Capital believes that the Halwani’s sales were below expectations, which were not supported by
the advantage of coincidence with Ramadan. As the sales value were impacted by the impact of currency exchange, which is likely to affect the expectation on sales growth for the quarters ahead.
The research house said its outlook will remain pessimistic in the coming quarters due to continued pressure from Egypt sales.
As for Halwani's expected financial performance through the rest of 2016,Al Jazira Capital expects it to post SAR 88.8 million in net income (SAR 3.11 EPS) for 2016,recording a decline of 22.8% y-o-y due to the impact of currency risk and despite capacity expansions at core business in Jeddah.
