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DUBAI / Reuters
Shares of companies that beat quarterly earnings estimates outperformed on Tuesday with electronics and bookstore retailer Jarir helping lift the mood on the Saudi Arabian exchange. Markets across the region rose modestly in thin trade.
Shares of Jarir surged 6 percent to 141.0 riyals in the heaviest volumes in two weeks after it reported a 26.5 percent rise in first quarter net profit, beating analysts’ forecasts. The company’s board also recommended distributing 2.2 riyals per share for the period, higher than the 1.75 riyals it paid out in the prior year period.
“This implies an annualised dividend of 8.8 riyals per share and yield of 6.6 percent, which is amongst the highest in the sector and offers downside-risk protection to investors,†said Riyadh-based NCB Capital. Jarir’s top line rose by 20.3 percent in the period, helped by rising sales of smartphones and sales of goods to schools.
Analysts at Riyadh-based Alrajhi Capital said revenue growth was probably driven by new store openings after Jarir opened a record seven retail stores in the last four quarters. Also Alrajhi Capital said like-for-like sales at existing stores came in better than estimated.
Consumers’ spending is expected to improve on the back of the reversal of last year’s cut in civil servants’ pay packages. That is good news for companies like Jarir, despite its shares trading at a slight premium to other retailers on a forward price-to-earnings ratio. In Dubai, the index rose 0.5% as shares of DFM, the only listed stock exchange in the Gulf, rose 1.7% after its Q1 net profit jumped by almost a fifth.
In Abu Dhabi, shares of the largest listed developer Aldar Properties rose 1.8% after its net profit attributable to shareholders for the first quarter came in at the upper end of analysts’ estimates, although slightly lower than a year earlier. The index rose 0.1 percent. Qatar’s index added 0.1% as half of the shares rose. Oil-sensitive shares recovered some losses made in recent days with Gulf International Services adding 0.5% on Tuesday, but staying near a 2013 low touched on Sunday.