Saudi Budget’s Q2 profits in-line with estimates: AlJazira Capital

Budget Saudi’s second quarter 2019 profit came in line with AlJazira Capital’s estimates.

The company posted revenue of SAR 254.5 million in Q2-19, in line with the brokerage’s estimate of SAR 251.2 million. Revenue grew 1.5 percent year-on-year (YoY), majorly driven by a 21.1 percent YoY rise in short-term rentals, which was supported by the holiday season in the Kingdom. 

“Revenue growth is expected to be driven by improvement in short-term car rentals and increased focus on pre-owned car sales in the revenue mix,” the brokerage noted. 

“Saudization in car rental offices and increased tourism spending are anticipated to boost rental revenues, while introduction of e-payments and aggressive marketing operations are likely to add buyers in the pre-owned car sales segment.”

Additionally, vehicle sales grew 9.5 percent YoY as the number of buyers doubled on account of increased marketing campaigns and introduction of e-payment services. 

“However, long-term lease revenue continued its downtrend for the third consecutive quarter as it fell 9.3 percent YoY. We expect short-term rental revenue to rise at a CAGR of 10.8 percent during FY18–24, while long-term lease and gain on sales are estimated to register a CAGR of 4.4 percent and 4.2 percent, respectively,” it said. 

AlJazira Capital maintained its “neutral” recommendation towards the company share, setting a target price of SAR 36.40 per share.