Bawan Co. (Bawan) reported Q3 2017 results with an earnings surprise, despite economic contraction amid falling selling prices, Riyad Capital said in a review.

 

Bawan’s net income stood at SAR 23.3 million in Q3 2017, up 10 percent YoY and 162 percent QoQ, beating Riyad Capital’s estimates of SAR 10.1 million.

 

“We maintain our estimates for 2017-19 and target price at SAR 20.00 but upgrade our rating to Buy from Neutral, due to stock’s recent correction, ” the brokerage said.

 

The re-rating is driven by large earnings beat in Q3, as well as the stock price correction of -30 percent YTD.

 

Riyad Capital had expected a deep cut in selling prices, which did not materialize; but volumes moved up, boosting Q3 revenue. 

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