Domestic flights resumption to ease pressure on Saudi Catering in H2 2020: Itqan Cap

The resumption of domestic flights in the last week of May is expected to provide Saudi Airlines Catering Co. (Saudi Catering) with some relief in the second half of 2020, Itqan Capital said in a research note.

The brokerage firm expects a slight recovery in revenue in H2 2020 on the back of domestic flights.

The company continued to suffer in the second quarter of 2020 on the back of the rigid restrictions during the quarter, Itqan noted, adding that the future of Saudi Catering looks uncertain as the implications of the pandemic on the people’s travel behavior remain unclear.

The recovery in the travel sector will likely take longer as the disruption in the economy is bound to shrink travelers’ budget for tourism/ leisure travel significantly.

Itqan updated Saudi Catering’s share target price to SAR73.7 per share with an “Underweight” recommendation.