Riyadh - Mubasher: Albilad Capital downgraded their valuation of Savola Stock from SAR 43.8 to SAR 41 per share, reflecting exchange rate fluctuations, higher operating expense and increased outlets shutdowns, according to a recent report.

The research firm believes that the management strategy will involve four steps. First, a cautious and selective expansion in the retail network factoring in the remarkable shutdowns in 2016 and accompanying growth in operating expenses as well as the economic downturn.

“We also believe that failure to keep pace with the market, and the aggressive expansion may backfire,” the report indicated.

Secondly, cost cutting plans to cope with intensifying competition in the market. Thirdly, seeking to exploit favourable world prices of agricultural commodities to achieve maximum profitability margin, and finally, the pursuit of increasing integration between units of the group, as well as the introduction of high-profit products and increased private labelling.