Riyadh - Mubasher: Albilad Capital has set the fair value of National Agricultural Development Company (NADEC) at SAR 27.4 per share with a Neutral recommendation, 9.1% lower than the price with which it closed Sunday’s trading session in the Saudi Stock Exchange (Tadawul).

NADEC profits for the first quarter of 2017, came lower than expectations, the research firm explained in a recent report.

Albilad believes that the shrinkage in purchasing power reflected negatively on the company's sales in the last period, especially juices and cheese sales, coincided with the rise in operating expenses.

“The recent royal decree to reinstate some financial benefits for state works is expected to entice demand, however the anticipated adjustment of energy prices in the second half of the year would weigh on profit margins coupled with additional fees for foreign labor and their dependents.”

“On a quarter basis, the company's performance is expected to ameliorate in Q2-17 reflecting robust sales in Ramadan, increased demand for some products due to weather conditions, and harvest seasons as well as the reinstatement of benefits for state employees,” the report noted.

NADEC’s income statement will be boosted by a capital gain of SAR 22 million from the divestment of the company's 17.5% stake in Pure Breed Poultry Co in a deal worth SAR 25 million, the report indicated, adding that the investment bears a carried amount of SAR 3 million in the balance sheet. Our current valuation for stands at SAR 27.4 per share.