Saudi Airlines Catering Co.’s Q2 2018 net income (SAR 120.3 million) matched AlJazira Capital’s estimates of SAR 121.3 million, but came 6.2 percent below consensus forecasts, the brokerage firm said in an earnings note.
Revenue reached SAR 562 million, implying a rise of 2 percent year-on-year.
“Although sales came above our estimates; supported by an increase in the in-flight catering and business lounge activities, lower revenue from retail business remain as our short-term concern,” AlJazira Capital added.
The key valuation upsides are the company’s strategic expansions and the National Transformation Plan initiatives to raise the number of pilgrims.
Downside risks include further price revisions from Saudia and slower than expected growth in number of flights.
The full-year net profit is projected to drop 4 percent YoY to SAR 464.8 million this year.
The catering company is likely to distribute dividends of SAR 5.50 per share for FY18, with a 6.2 percent yield at current prices.
AlJazira Capital remained “Neutral” on the stock, but raised its target price to SAR 93.30 from SAR 90.80.
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