SADAFCO’s Q3 2019 net profit exceeds estimates: Al Rajhi Cap

Saudia Dairy & Foodstuff Co.’s (SADAFCO) net profit of SAR 68 million for the third quarter ended Dec. 31, 2019, exceeded Al Rajhi Capital’s estimates of SAR 55 million.

The brokerage firm said in a research note that the key downside risk that may affect the share includes significant increase in skimmed milk powder prices, and slowdown in consumer spending due to any regulatory issues. This, in turn, might impact the revenue growth of the company and ultimately its target price.

“We have observed an improvement in consumer demand in Saudi Arabia and believe that the

company will be able to maintain its leadership position in the ultra-high temperature (UHT) milk segment and improve the market share in ice-cream segment as well, leading to similar

level of margins in the near-term,” Al Rajhi said.

The firm revised its recommendation to “Overweight” and increased the target price from SAR 156/share to SAR 164/share.