Riyadh – Mubasher: Al Rajhi Capital has upgraded the price target (PT) for Herfy Food Services’ stock to SAR 67 from SAR 56 with ‘overweight’ recommendation.

The Saudi food provider’s anticipated dividend yield of 4% for the fiscal year 2019 is considered highly attractive, the research firm said in a report on Wednesday.

Herfy Food Services Co posted a slight rise of 0.7% in profits to SAR 48.06 million in the first quarter of 2019, lower than the analysts’ estimate of SAR 51 million.

The research firm attributed the lower-than-expected net profits to the increase in administrative and marketing expenses, as well as a growth in financing costs on the back of implementing the International Financial Reporting Standards (IFRS).

Herfy Food’s revenues rose by 9.5% year-on-year to SAR 313 million, higher than Al Rajhi Capital’s estimate of SAR 302 million.

The increase in revenues was primarily driven by to a growth in sales of existing stores, an increase in the number of restaurants, along with better-than-expected performance of meat and bakery segments.

The research firm expected the company’s revenues to further improve, supported by the continuous sales growth of existing stores, driven by a gradual improvement in consumer sentiments.