U Capital – BinDawood – 4Q23 Result Review

Issue Date: 11 March 2024

BinDawood posts a 10% YoY revenue increase in 4Q23, largely matching consensus and U Capital’s estimate

BinDawood Holding posted a 10% YoY increase in its top line in 4Q23 which largely matched Bloomberg consensus as well as our estimate. Initiatives undertaken by the company like improving product quality and customer loyalty program-focused marketing boosted sales of both BinDawood and Danube branded stores, thereby driving overall revenue higher.

 

Operating and net profit surges, exceeding both Bloomberg consensus and U Capital’s expectations 

Backed by decent revenue growth and various strategic steps like cost optimization, improving product mix, negotiations with suppliers for favorable terms, and focusing on quality output, among others, BinDawood’s operating profit surged in 4Q23 to SAR 132.3mn from SAR 39.9mn in 4Q22. As a result, the company’s net profit doubled YoY to SAR 119.4mn, exceeding both consensus as well as our estimate.

      

Put on Under Review

Post the company’s strong financial performance in 4Q23, which we believe is mostly driven organically, we place BinDawood’s stock Under Review as of now, and will hopefully come with a revised target price and/or rating soon.

 

Valuation

At the current market price, the stock is trading at 34.0x P/E and 12.8x EV/EBITDA, based on our FY 2024 estimates, above its 3-year daily average forward P/E of 26.8x and EV/EBITDA of 12.3x.