Revenue increased 20% YoY, largely in line with our expectation
The Company reported a revenue of AED 900.7mn for 4Q22, which was largely in line with our expectations. The revenue increased by 20% YoY and declined by 1% QoQ. The increase in revenue was driven by growth in its core business of Tiles, Sanitaryware and Tableware in addition to growth in faucets on the back of KLUDI acquisition.
Gross profit increased by 22% YoY, missed our expectation
The company’s gross profit grew 22% YoY to AED 307.6mn for 4Q22, missing our expectations of AED 326.6mn. The gross profit increased mainly due to improved production efficiencies and improved utilization. However, growth was impacted by costs associated with Saudi Custom Duty and higher input costs. The net profit of the company increased 137% YoY to AED 107.2mn for 4Q22, in line with our expectations. The net profit increased supported by higher revenue and margin expansion.
Maintaining a “Buy” rating on the stock
The company’s revenue is expected to continue its growth trajectory led by demand in the Tiles and Sanitaryware segment. The company has completed sanitaryware capacity enhancement in UAE and production will be at full capacity for 2023 which will support revenue growth going forward. The input costs are likely to decline led by efficient cost control methods which will increase the bottom line in the future. Accordingly, we maintain a Buy rating for the stock with a previous target price of AED 3.67.