Saudi stock index resists the pressure of corporate results

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Tassi index ends the session, down 0.12% to 8449.29 points

Source: Arabic.net

The Saudi stock market index ended the trading session on Sunday, down slightly by 0.12% to lose 10.51 points and close at the level of 8449.29 points, with a total trading value of 3.3 billion riyals, with a volume of 158 million shares.

This closure comes with the index resisting pressures stemming from the results of major companies, which were less than the expectations of analysts, most notably today the results of Almarai.

The share of Saudi Aramco fell by 0.72%, losing 25 halalas, to close at the price of 34.35 riyals, with a total turnover of 377.1 million riyals and a volume of 10.95 million shares.

The profits of Almarai Company decreased to 1.8 billion riyals at the end of 2019 by 9.95% compared to 2 billion riyals in the same period last year.

Almarai’s share closed 0.91%, losing 45 halalas to the price of 49 riyals, with a total turnover of 16.6 million riyals and a size of 347.4 million shares.

A financial markets expert, Abdullah Al-Rabdi, said in an interview with “Al-Arabia” that the results of the Saudi Almarai Company reflected a major challenge facing the company in the margins of profitability.

He added that Almarai’s results reveal the impact of the food production sector companies on factors that change the costs of their inputs, including changes in feed and labor costs.

He noted that the revenue growth in Almarai 6% annually was not matched by a rise in the gross profit margins, but rather that the growth was very weak, indicating that the rise in costs is higher than the rise in revenue.

He pointed to a 9% increase in selling and distribution costs, along with an increase in financing costs.

He called on the company to review its expansion strategy in the Egyptian market, which limits competition and will put pressure on Almarai’s profit margins.

He said that the dairy and juice sector will face the problem of sugar tax, but he considered that other sectors such as bakeries can provide the company with higher profit margins and the field of competition will be good in it.

Al-Rabdi stated that the poultry sector raised Almarai’s revenues due to the openness to the Kuwaiti market.

He said that the food production sector will face a major problem that may lead to price hikes, especially in the field of juices, or to a price war that will ultimately affect the performance of companies.

On the financial results of Extra Company, Al-Rabadi said that the company’s expansion in the sales activity through installments had a positive impact, which is an option and a competitive advantage for this company and not for all its competitors in the sector.

For his part, the equity research analyst at AlAhli Capital, Mohamed Tumalia, said that the results of Almarai’s company came without the expectations of his company, which was referring to the company achieving profits of 400 million Saudi riyals during the fourth quarter of last year, as the expectations of other analysts indicated that it was achieved 450 million riyals.

While the company’s sales came in line with the expectations of AlAhli Capital, the weak profit margins due to the increase in the input costs and the cost of labor contributed to the decrease in the company’s profits, according to Tumali.

Tumleya expected the company’s sales to increase by about 5% to 14.77 billion riyals this year, and achieve a net profit of 1.9 billion with the support of the poultry sector of the company.

He stressed that his company’s expectations may change when the negative impact of the value-added tax imposed on sweetened drinks is shown.

Today’s session

In the Saudi stock market session today, Sunday, the number of shares traded reached more than 155 million shares, which were shared by more than 160 thousand transactions, in which shares of 126 companies registered an increase in their value, while 56 shares closed down.

The shares of Gypsco, Al-Hokair, Extra, Cisco and Amiantit were the top gainers, while the shares of SABB, Tabuk Cement, Cooperative and Eastern Development and Matlif Arab AIG were the most declining in trading, as rise and decrease rates ranged between 7.98% and 1.98 %.

Whereas, the shares of Dar Al-Arkan, Saudi Aramco, Zain Saudi Arabia, Development and Al-Jouf Cement were the most active by volume, as were the shares of Saudi Aramco, Al-Rajhi, Dar Al-Arkan, Al-Inma and SABIC were the most active in value.

The Saudi Parallel Equity Index (Nomu) closed today, up 127.49 points, to close at the level of 7518.56 points, with trades valued at more than 21 million riyals, and the number of traded shares reached more than 500 thousand shares shared by 1677 transactions.





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