Itqan Capital recommends 'Buy' on Saudi Catering, sets TP at SAR 97.91

Logo of Saudi Airlines Catering

Itqan Capital placed a “Buy” recommendation on Saudi Airlines Catering Co., while also revising its target price (TP) to SAR 97.91 per share.

The company was able to turn the challenges of the year into diversification opportunities to decrease its dependence on the aviation sector, which was severely affected during the COVID-19 pandemic, and focus instead on catering and services, the brokerage said in a recent report.

Saudi Catering showed outstanding efforts to diverse revenue sources in addition to cost efficiency initiatives that significantly hindered the negative impact of the economic climate.

The brokerage noted that Q1 2021 showed great promise, adding that, going forward, the governmental support is bound to boost the recovery for the aviation and tourism sectors, while the company’s operational efficiency will ensure a competitive advantage.

Itqan Capital expects the company to see gradual recovery in its revenues in 2021, and to reach full recovery to pre-COVID levels in 2024.

It also expects the company to post SAR 147 million net profit for 2021 and SAR 274 million for 2022.

Saudi Catering posted SAR 30 million loss for Q1 2021, against SAR 15.6 million profit in Q1 2020, Argaam reported.