Saudi Catering's Q3 matches estimates: Al Rajhi Cap

13/11/2018 Argaam

 

Saudi Airlines Catering’s Q3 2018 net profit of SAR 143 million came in-line with Al Rajhi Capital’s estimate of SAR 144 million, but higher than consensus estimate of SAR 135 million, Al Rajhi Capital said in an earnings review.

 

Q3 revenue grew 4.2 percent YoY to SAR 628 million, driven by in-flight catering and business lounge services. This implied an increased number of flyers and tie-ups with companies providing privileged business lounge benefits to their customers, Al Rajhi noted.

 

“Going forward, we expect the company to continue to face headwinds in the form of advent of budget carriers in the airline industry,” the brokerage noted.

 

According to Al Rajhi, elevated levels of receivables is likely to further pressurize the performance. However, increased passenger traffic on the back of higher number of commercial flights should partially offset the pressure.

 

“Post Q3 results, we revise our forward looking estimates,” Al Rajhi noted, while recommending a Neutral rating on the stock with a target price of SAR 89.

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