Saudi Ground Services Q2 2020 loss exceeds expectations: Aljazira Cap

Saudi Ground Services Co.’s (SGS) Q2 2020 net loss of SAR 197.9 million exceeded analysts’ and market consensus estimates of SAR 158.9 million and SAR 187.4 million respectively, Aljazira Capital said in an earnings report.

The deviation was attributed to the unprecedented operating conditions due to the COVID-19 outbreak and subsequent precautionary measures. With the gradual resumption of domestic flights, operating conditions are expected to slightly improve in Q3 2020.

“However, we believe the rate of recovery would be slow, given that the pandemic is not yet under control. We expect SGS’s revenue to remain under pressure through H2 2020,” the brokerage firm said.

The firm expects to see great potential in the long run for the expansion of aviation and related businesses in Saudi Arabia, given the government’s focus on attracting tourists, increasing the number of flights at airports, and improving airports capacities to serve a larger number of visitors.

Aljazira Capital maintained its “Neutral” recommendation on SGS and kept the target price unchanged at SAR 27.9 per share.