Al Tayyar’s revenue expected to grow at mid-single digit in 2018: Falcom

Al Tayyar Travel Group Holding Co. is likely to report mid-single digit growth in revenue this year, backed by its online travel sector, Falcom Financial Services said in a recent report.

The company aims to achieve a gross booking value of SAR 3.7 billion by 2020, in line with its multi-channel strategy to transform into a fully integrated e-travel agency.

“Additionally, a boost in tourism, driven by government efforts (as part of Vision 2030), is likely to translate into top-line expansion for Altayyar,” the brokerage firm added.

Profit margins, however, could be impacted by high operational costs, increasing competition, and restricted consumer spending due to subsidy removal.

Al Tayyar’s net profit for the year fell 37.4 percent year-on-year (YoY) to SAR 86 million on account of competitive pricing for some services.

Adjusting for the impact of impairment loss on equity-accounted investees and that on trade receivables (SAR 6 million and SAR 11 million, respectively), net profit would drop 24 percent YoY.

“Al Tayyar's Q1 2018 results were influenced by factors such as growth in segmental revenues, even as major clients re-negotiated contract terms. However, tapping growth in the online business and focusing on cost control is likely to result in margin expansion,” Falcom said.

The brokerage firm affirmed its “overweight” rating on the stock, slashing its target price to SAR 33 from SAR 34.4.