In a global research report recently issued by HSBC, it stated that Savola's retail operations, through its subsidiary Panda, are growing not only in terms of sales per square meter but due to increasing margins within the retail segment.
Sales per store are increasing at a much faster pace at Savola's subsidiary Panda compared to other rivals in the market which indicate a change in consumer tastes and habits towards higher end stores and improving brand recognition due to the growing number of stores. Panda currently has over 131 stores in the Kingdom with plans to open 19 more in 2012 providing more than 800 jobs for Saudi nationals.
In addition to that, Panda has gained sufficient scale and absorbed all its acquisitions successfully with net income margins improving from 1.2% in 2009 to 1.6% in 2010 and to 2.2% in 2012.
HSBC rated the Company with an overweight rating and determined the target price at SR 44 compared to SR 35 which was the existing share price when the report was issued.
It is worth to mention that The Savola Group operates in three core sectors: Food Sector which includes edible oils, sugar, and pasta, Retail Sector through Al Aziziya Panda supermarkets and hypermarkets and the Plastics Sector, which manufactures both (rigid & flexible plastic products). In addition of a diversified portfolio of strategic investments where it owns 29.99% of Al-Marai fresh diary company, 49% of Herfy foods & restaurant chain, 30% of Kinan International real estate, and one of the founders of King Abdullah Economic City and Knowledge Economic City in Al-Madina Al-Monawarah. The Group has previously declared a record net profit from operations for the year 2011 amounted to more than one billion riyals, with an increase of 35%. As well as announcing on forecast net Income of 1.2 billion riyals (before capital gains) for the year ending 2012.
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© Press Release 2012
