Jarir Marketing Company (4190.SE): Earnings momentum supports valuation premium – Maintain Neutral

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Jarir Marketing Company (4190.SE): Earnings momentum supports valuation premium – Maintain Neutral

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21 Jul 2026 06:51:09 ET │ 15 pages

Jarir Marketing Company (4190.SE)

Earnings momentum supports valuation premium – Maintain Neutral

CITI'S TAKE

We update our model post Q2 2026 and increase our net income estimates for

FY26/FY27 by 8% and 6%, respectively, to reflect stronger gross margins driven by Neutral

lower promotional activity and a more favorable sales mix. We raise our target price

Price (20 Jul 26 15:00) SAR17.13by 6% to SAR 16.5, supported by stronger near-term earnings and positive market

share momentum. The stock trades at 17.3x/16.8x P/E for FY26/FY27 on our revised Target price SAR16.50↑

estimates, which we believe appropriately reflects the current earnings trajectory from SAR15.50and attractive 5.3% dividend yield. We maintain our Neutral rating as we continue to

expect margin normalization over the medium term. Expected share price return -3.7%

Expected dividend yield 5.3%

Positive margin surprise — Jarir posted a 170bps expansion in GM during Q2, driven

Expected total return 1.6%by lower promotions and favorable sales mix. This was supported by higher

electronics pricing globally due to memory chip shortages and supply chain Market Cap SAR20,556M

bottlenecks. Jarir continues to benefit from its scale in KSA and its strong supplier US$5,473M

relationships, enabling better inventory availability than peers. While we expect

these benefits to continue into H2 2026, we see rising risks of demand softening as

consumers react to higher prices and vendors increasingly prioritize premium

products. We raise our gross margin assumptions by 80bps for FY26 and 60bps for

Price PerformanceFY27, while leaving the remainder of our forecasts largely unchanged.