The financial impact of the coronavirus (COVID-19) spread on Saudi Ground Services Co. (SGS) and Saudi Airlines Catering Co. (SACC) is expected to be extreme as their revenues are completely dependent on the working of airports and flights, Aljazira Capital said in a recent research report.

 

The brokerage firm further noted that the impact on United International Transportation Co. (Budget Saudi) is likely to be limited to its short-term rental business (26% of FY19 revenue) and the sale of used cars (25%).

 

It added that Budget Saudi’s top-line would take a hit, as short-term rentals are the company’s key revenue growth driver.

 

The research firm added that it is difficult to assess the quantitative impact on financials currently as the duration of the lock down is yet uncertain, and added that governmental restrictions are expected to be extended.

 

The following table shows Aljazira Capital’s expectations regarding the spread of COVID-19:

 

Impact of COVID-19 outbreak

Company

Impact

Extent of impact

SGS

Negative

Very high

SACC

Negative

Very high

Budget Saudi

Negative

High

 

Aljazira Capital - Impact of Novel Corona on Selected Equities 05/04/2020

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