Al Tayyar Travel Group incurred net losses of SAR 355 million in Q3 2018 on impairment charges and higher operating expenses, Falcom Financial Services said in an earnings review.
The travel group recognized a one-time impairment loss of SAR 421 million on sale of a 30 percent stake in Thaker Investment and Real Estate Co.
Adjusting for the impairment loss impact, net profit would have stood at SAR 66 million.
The third-quarter revenue edged up 0.5 percent year-on-year (YoY) to SAR 492 million.
Al Tayyar recently formed a strategic alliance with the Dubai’s Department of Tourism and Commerce Marketing to promote Dubai as a preferred destination for Saudi travelers.
The move is likely to boost revenue in the long term. However, a decline in core government business resulting from a change in terms with key clients would continue to weigh on the topline in the coming quarters.
“Overall, the company remains fundamentally strong as the balance sheet provides sufficient room for increasing leverage,” Falcom added.
The brokerage firm cut Al Tayyar’s target price to SAR 25.50 from SAR 29.50 in light of the weak results, but maintained its “overweight’ rating on the stock.
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