The following analyses and forecasts are not the opinions of this publication but are based on reports and assessments provided by financial institutions AI Rajhi Capital.

Al Rajhi Capital Initiating coverage on Saudi Manpower Solutions Co.(1834.SA) with a “Neutral” rating at a target price of SAR 7.5 per share, in line with the IPO price. As the first licensed manpower solutions provider in the Kingdom with a team of 37,000+, SMASCO holds a significant market share of 14%-16% and is well-positioned to benefit from the booming economy and Vision 2030 initiatives. However, the company faces near-term margin pressures due to intense competition and regulatory price caps that pose risks to profitability. While SMASCO enjoys robust revenue growth prospects and balance sheet strength, competition and margin erosion are of concern. The company’s advanced IT infrastructure and asset-light model allow for scalable growth, but the valuation reflects the current market challenges, assuming a conservative earnings multiple and potential upside from regulatory changes.

Rasan Information Technology Co.(8313.SA), the leading insurance aggregator in the Kingdom, receives an “Overweight” rating with a target price of SAR 45/share, indicating a 21.6% potential upside. Rasan boasts strong brand equity and growth potential, expected to grow at a CAGR of 26% over the next three years, driven by increasing insurance penetration due to favorable government policies. High internet and smartphone usage in KSA set the stage for Rasan to expand its existing platforms and introduce new products, benefiting from Saudi Arabia’s growing population and Vision 2030 goals to boost insurance coverage. With a market dominance in retail motor insurance and leased vehicle policies, and plans to branch out into new verticals, Rasan is poised for significant topline and earnings growth. The stock is currently valued attractively at a forward P/E of 43.8 for 2024 and 31.5x for 2025 against the discounted cash flow valuation.

Al Rajhi Capital maintains a “Neutral” rating on Bawan Co.(1302.SA), setting the Fair Value at SAR 41 per share, indicating a 4.8% downside from the last closing price. Bawan’s profitability has been in decline due to external market pressures since 2021, with subdued growth projected in the metal/wood segment and more optimistic expectations for the electrical segment due to new ventures like modular data centers starting in 2025. The valuation, based on an equal weighting of the DCF method (using an 8.4% WACC and a 2.5% terminal growth rate) and a historical EV/EBITDA ratio of 11.5x, reflects a balance of risk and reward at the current price level.

Al Rajhi Capital upgrades National Agricultural Development Co.(6010.SA) to “Overweight” with a revised Fair Value of SAR 35 per share, implying a 22% upside from the last close due to expected continued growth driven by expansions in Dairy, Agriculture, and Protein segments. Following a 12% CAGR between 2020 and 2023, an 11% CAGR is forecasted for the next three years, supported by significant cash reserves and strategic low-cost financing. The upcoming slaughterhouse operation and a JV in the protein sector contribute to positive long-term growth, although gross margins may slightly decrease due to a shift towards lower-margin segments. Valuation uses a balanced DCF method with a 3.5% terminal growth rate and a P/E multiple of 23x, indicating strong growth potential and profitability for NADEC.

Al Rajhi Capital has upgraded Astra Industrial Group(1212.SA) to “Overweight” with a target price of SAR 187 per share, suggesting a substantial 36.5% upside potential. The upgrade follows a stock price decline despite solid Q1 2024 results, with concerns about the pharma segment’s growth viewed as overstated. The company is on track for robust topline growth, particularly with expected H2 contributions from the NUPCO order. Additionally, the steel segment has shown promising growth. The valuation accounts for slight adjustments to forward-looking projections and recent market corrections, with the pharma business multiple reduced to 28x. Astra’s strong industry position and government relationships, along with growth from the tender business and steel segment, underpin the positive outlook and Overweight recommendation.