FALCOM stays “Neutral” on Savola, lowers TP to SAR 40

FALCOM Financial Services maintained its “Neutral” rating on Savola Group, but lowered the target price (TP) to SAR 40 per share.

“Savola faces headwinds in the form of a higher value-added tax (VAT) rate, which could result in a reduction in consumer spending, and may suppress its profitability in the near term,” the brokerage said in a recent note.

Moreover, continued weakness in the sales of oil and sugar products due to lower demand remains a challenge for Savola.

The company is expected to report an 8% year-on-year (YoY) increase in net profit to SAR 984 million in 2021.