Saudi Ground Services Q2 beats estimates on higher revenue: Aljazira Cap

Saudi Ground Services Co.'s (SGS) second-quarter net profit of SAR 112.7 million came above Aljazira Capital’s estimates of SAR104.2 million due to higher-than-estimated topline growth and marginally lower OPEX, the financial advisory firm said in an earnings review on Tuesday.

The company's Q2 net profit fell 7.8 percent year-on-year from SAR122.2 million due to an increase in the cost of living allowance provided to staff and other operating expenses.

Revenue stood at SAR 659.9 million, higher than the brokerage's estimates of SAR 630.1 million, as a result of higher-than-estimated utilization rate.

SGS reported a gross profit of SAR189.4 million, more than Aljazira Capital’s estimates of SAR183 million, supported by rise in estimated revenue.

Gross margins stood at 28.7 percent compared to 29.1 percent last quarter, while OPEX declined 38.6 percent YoY due to reduction of provisions.

"Flat growth in revenue is an early sign of recovery after six consecutive quarterly declines. Going forward, we believe the company can potentially enhance its revenue growth driven by fleet expansion from airline operators and higher aircraft traffic," the report noted.

Aljazira Capital recommended a “Neutral” rating on the stock with a target price of SAR 39.5 per share.