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Saudi consumer cos to gain from welfare spend: AlembicHC
Upgrades Herfy to overweight from neutral; Says Jarir remains top pick in Saudi consumer coverage
April 4, 2011 5:01 by Reuters
Saudi Arabia’s consumer sector should benefit most from the country’s social spending packages, AlembicHC said, and expects positive revenue surprises in 2011.
Last month, Saudi Arabia’s King Abdullah announced $93 billion in social handouts, the second benefits package to be unveiled within a month, and included 250 billion riyals ($67 billion) to be spent on 500,000 new homes.
AlembicHC, which upgraded Herfy Food Services Co a notch to “overweight,” expects 13 percent year-over-year revenue growth at the company in 2011 driven by 20 restaurant openings and higher third-party processed meat sales.
The brokerage named Jarir Marketing Company as its top Saudi consumer pick. The stock was among the worst performing MENA consumer names in 2010 with the market discounting continued margin compression on overstated concerns, it added.
On Almarai Co , the Gulf’s biggest dairy firm by market value, the brokerage said share price performance could remain muted in the short term as the first quarter is likely to be relatively weak.
AlembicHC maintained “overweight” ratings on Jarir, Almarai and Abdullah Al Othaim Markets Co , and “neutral” on Fawaz Abdulaziz Alhokair Co.
(Reporting by Mary Meyase in Bangalore; Editing by Don Sebastian)