Saudi Ground service Co. (SGS) recorded its first quarterly loss in Q1 2020, as performance was hit by the COVID-19 outbreak amid subsequent precautionary measures from the government and certain one-time expenses, Aljazira Capital said in an earnings report.
The brokerage firm expects the impact of COVID-19 to weigh in more heavily on the company’s revenue in Q2 2020, as flights were grounded for almost two months during the quarter.
Impairment loss on trade receivables is also anticipated to remain high, the report added.
“With flights resuming from May 31, the company’s operating conditions are expected to improve. However, the rate of recovery is likely to be slow as the number of flights would increase gradually,” Aljazira said.
The firm downgraded its recommendation on SGS to “Neutral” and lowered its target price from SAR 35.30 to SAR 27.90 per share.
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