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Satyendra Pathak
Doha
Widam, the leading livestock and red meat provider of Qatar and a key contributor to Qatar’s National Food Security Program, is likely to be the top beneficiary of increasing local production that should enjoy higher profitability against imports, QNB Financial Services (QNBFS) has said in its latest company report.
“The Strategic Food Security Projects disclosed by the Ministry of Municipality and Environment (MME) in March 2019 envisages that local production of red meat could go up from the current 18 percent to 30 percent by 2023. Widam is ideally placed to benefit from this increase in local production,” QNBFS said in the report.
“Australian meat is a major part of Widam’s subsidised imports, but not all, and we think the company can shift a part of its subsidised imports to other countries. However, the ultimate potential impact on Widam’s bottom-line will be observed starting from the first quarter of 2021 and it will depend on the Qatari meat market’s price-volume elasticity,” the report said.
Commenting on the company’s annual results, QNBFS said, “Widam reported net profit, adjusted for impairments and provision, of QR11.1 million in the fourth quarter of 2020, below our estimates. Widam reported a net profit, excluding provisions and impairments, of QR11.1 million in the fourth quarter of 2020 as compared to QR15 million in the same quarter of the previous year, below our estimate of QR18.1 million. On the other hand, due to the QR24.9 million of impairments and provisions allocated in the fourth quarter of 2020, Widam posted a net loss of QR13.8 million in the fourth quarter of 2020 against a net profit of QR15 million in the same quarter of 2019.”
The company reported adjusted net profit excluding provisions and impairments of QR75 million and net profit including provisions and impairments of QR50.1mn in 2020 as compared to a net profit of QR78.4 million in 2019.
“The board of directors has proposed distribution of a cash dividend of 10 percent of the nominal share value, QR0.10 per share, which was also below our estimate of QR0.15 per share,” it said.
Revenue was up 54.8 percent YoY and 19.1 percent QoQ with the HORECA (hotels, restaurants, cafés) segment supported by the gradual lifting of coronavirus counter-measures in the fourth quarter of 2020, coupled with a likely demand boost before government subsidies ended in December.
On the positive front, the report said, Widam recorded QR30 million of fair value income in 2020 under ‘other comprehensive income’ that is attributable to Baladna’s share price increase.
“Widam bought 38.02 million shares in Baladna that corresponded to a 2 percent stake during the IPO at QR1.01 per share. These shares have risen to QR1.79 as of December 31, 2020. While these gains do not flow into the P&L, they still remain in Widam’s balance sheet as a notable hidden value,” the report said.
“We maintain our Market Perform rating and our target price of QR8.2 on Widam,” the report said.
Doha
Widam, the leading livestock and red meat provider of Qatar and a key contributor to Qatar’s National Food Security Program, is likely to be the top beneficiary of increasing local production that should enjoy higher profitability against imports, QNB Financial Services (QNBFS) has said in its latest company report.
“The Strategic Food Security Projects disclosed by the Ministry of Municipality and Environment (MME) in March 2019 envisages that local production of red meat could go up from the current 18 percent to 30 percent by 2023. Widam is ideally placed to benefit from this increase in local production,” QNBFS said in the report.
“Australian meat is a major part of Widam’s subsidised imports, but not all, and we think the company can shift a part of its subsidised imports to other countries. However, the ultimate potential impact on Widam’s bottom-line will be observed starting from the first quarter of 2021 and it will depend on the Qatari meat market’s price-volume elasticity,” the report said.
Commenting on the company’s annual results, QNBFS said, “Widam reported net profit, adjusted for impairments and provision, of QR11.1 million in the fourth quarter of 2020, below our estimates. Widam reported a net profit, excluding provisions and impairments, of QR11.1 million in the fourth quarter of 2020 as compared to QR15 million in the same quarter of the previous year, below our estimate of QR18.1 million. On the other hand, due to the QR24.9 million of impairments and provisions allocated in the fourth quarter of 2020, Widam posted a net loss of QR13.8 million in the fourth quarter of 2020 against a net profit of QR15 million in the same quarter of 2019.”
The company reported adjusted net profit excluding provisions and impairments of QR75 million and net profit including provisions and impairments of QR50.1mn in 2020 as compared to a net profit of QR78.4 million in 2019.
“The board of directors has proposed distribution of a cash dividend of 10 percent of the nominal share value, QR0.10 per share, which was also below our estimate of QR0.15 per share,” it said.
Revenue was up 54.8 percent YoY and 19.1 percent QoQ with the HORECA (hotels, restaurants, cafés) segment supported by the gradual lifting of coronavirus counter-measures in the fourth quarter of 2020, coupled with a likely demand boost before government subsidies ended in December.
On the positive front, the report said, Widam recorded QR30 million of fair value income in 2020 under ‘other comprehensive income’ that is attributable to Baladna’s share price increase.
“Widam bought 38.02 million shares in Baladna that corresponded to a 2 percent stake during the IPO at QR1.01 per share. These shares have risen to QR1.79 as of December 31, 2020. While these gains do not flow into the P&L, they still remain in Widam’s balance sheet as a notable hidden value,” the report said.
“We maintain our Market Perform rating and our target price of QR8.2 on Widam,” the report said.
