Al Tayyar’s growth slows to the lowest since 2012, but remains at double-digit, Argaam

Al Tayyar Travel Group Holding Co., a Saudi Arabia-based travel and tourism service provider, has seen its growth this year decline to less than 20 percent for the first time since the company was listed in 2012, as the company’s revenue from government contracts shrank, according to Argaam analysis.

Growth rate in 2009 was more than 40 percent, but it declined to 23 and 25 percent  in 2010 and 2013, Argaam data shows.

Contracts with the Education Ministry  represented 44 percent of the revenue in 2010. In the 1st half of 2014, such revenues dropped to 28 percent or SAR1.1 billion. Al Tayyar is the education ministry’s sole agent which has an exclusive right to book all flights for students of King Abdullah foreign scholarship program. The program has as many as 165.900 students.

The company said in June that its contract with the government had expired in March but it is still effective as the ministry did not state otherwise.

Despite  the drop in revenue from government contracts, the company was able to increase revenue from other sources.

Al Tayyar 2nd quarter profit gained 8 percent to SAR 364 million (SAR 2.4 a share) year on  year. It was also 30 percent more than the 1st quarter profit. The profit increased on the back of a 11 percent growth in revenue and 24 percent rise in income, compared to 20 percent the previous year.

To diversify its investments, Al Tayyar in May increased its stake to 75 percent from 35 percent in Mothmera Real Estate Investment, a company that manages hotels and office buildings in Makkah. In July, it bought the remaining stake for SAR 208 million. Al Tayyar has paid a total of SAR 849 million for Mothmera.

The company booked SAR 360 million in provision in 2013. It includes land plots and an under-construction hotel in Makkah that could be taken over by the government for the holy mosque expansion plan.

As of August 21, Al Tayyar closed at SAR 129. The share has gained 52 percent this year, beating Tadawul index which added 25 percent in the same period. Hotel and tourism sector advanced 42 percent on the index.

Al Tayyar’s Price /earning ratio was at 18.4 and it has a price to book value of 7.