NCB Cap says SGS Q4 2020 loss below estimates, rating ‘Overweight’

Saudi Ground Services equipment

Saudi Ground Services Co.’s (SGS) net loss of SAR 118 million in Q4 2020 fell below NCB Capital and consensus estimates of a loss of SAR 15 million and SAR 19 million, respectively, the brokerage said in a recent report.

The company's operations were negatively impacted by travel restrictions and other precautionary measures taken to prevent the spread of the coronavirus in 2020, the brokerage said.

It said that SGS served about 44,000 flights in Q4 2020, adding that the removal of some travel restrictions is positive for future operations.

Despite the short-term negative impact, long-term forecasts for SGS remain positive due to expansion in the company's domestic fleet, coupled with the strategy of the Public Investment Fund (PIF) and the General Authority of Civil Aviation, and the increase in the number of Hajj and Umrah pilgrims, NCB Capital said.

The brokerage placed an ‘Overweight’ rating on the stock, setting its target price (TP) at SAR 34.50 per share.