Saudi Arabia's Jarir Marketing
posted a net profit of SR208 million (+23% y-o-y) for the second quarter of this year.
The company beat net profit estimates of SR183 million by 12%, said an Al Rajhi Capital report.
The top-line came in at SR2.374 billion (+25% y-o-y) beating Al Rajhi estimates of SR2.23 billion by 6%. The main reason for top-line growth was increased demand for computers, laptops and related accessories due to work from home measures taken by the companies in the kingdom.
The sales were also supported by strong pre-VAT demand towards June. Favourable sales mix led to an increase in gross margins by 50bps resulting in a 30% y-o-y increase in gross profit.
In Q2 2020 e-commerce sales were ~23% of the total revenue and the company is planning to expand its logistics capacity to support its e-commerce sales in future.
"Government recently extended online learning for seven weeks for the new academic year which in our view will negatively impact the stationary demand in Q3 2020. We expect a weak H2 2020 as electronic sales in H1 2020 was more than normal driven by one-off drivers. We expect consumer spending to gradually improve from Q1 2021 after taking a nosedive in H2 2020. Accordingly, we revise our forecast for 2020e slightly upwards and increase the TP to SR165/sh from SR141/sh but remain 'Neutral'," said Al Rajhi Capital. - TradeArabia News Service
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