Leejam Sports’s revenue rise driven by expansion in ladies’ fitness centres, analyst says

Leejam’s board of directors proposed a Q4 cash dividend of 5.38 percent

Screens within the Saudi stock exchange showing trading data. Image used for illustrative purpose.

Screens within the Saudi stock exchange showing trading data. Image used for illustrative purpose.


Leejam Sports Company’s shares rallied on Wednesday after the company announced a rise in fourth quarter (Q4) earnings for 2018.

The company recorded a Q4 2018 net profit of 53.86 million Saudi riyals ($14.36 million), compared to 48.48 million riyals for Q4 2017, an 11 percent year-on-year increase.

“Fitness Time (Leejam) reported a higher than expected set of Q4 18 results,” Mohamed Tomalieh, equity research analyst at NCB Capital said in a report sent to media outlets.

The company’s revenue in Q4 2018 rose by 15.8 percent year on year to 225 million riyals.

Tomalieh said on the company’s revenue: “This exceeds the 9M (nine months) 18 top-line growth of 6.8% yoy (year-on-year). We believe the growth in top-line came primarily as a result of the expansion in ladies’ fitness centres.”

The first licences for women’s fitness centres in Saudi Arabia were provided in July 2017, Leejam saw it as an opportunity. (Read more here).

“The company increased the female centre count from 8 in 2017 to 24 centres by 2018,” Tomalieh added.

Leejam’s board of directors have proposed a Q4 2018 cash dividend of 0.5379 riyal per share (5.38 percent).

The company’s stock rose 6.15 percent on Wednesday, outperforming all Saudi stocks. Its shares have gained 5.95 percent since the start of the year.

At the end of the trading session on Wednesday, the company’s stock was trading at 62.10 riyals. NCB Capital’s target price is 68.9 riyals.

“The stock trades at a 2019f PE (price-to-earnings) of 15.9x vs the global peer average of 18.1x,” Tomalieh said.

“We believe the aggressive expansion in the ladies’ fitness centres will continue to be a key earnings driver for Fitness Time. We forecast a CAGR (compound annual growth rate) earnings growth of 14.0% between 2017-2023,” he ended.

(Reporting by Gerard Aoun; Editing by Michael Fahy)


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