Itqan Capital says Budget Saudi Q3 2020 results good amid COVID-19, raises TP to SAR 36.5

United International Transportation Co. (Budget Saudi) reported a good set of results in the third quarter of 2020 despite COVID-19 pandemic, supported by its long-term lease and used vehicles sales which helped partially offset the significant drop-in short-term lease, Itqan Capital said in a new report.

The company’ Q3 2020 earnings beat the brokerage’s expectations, mainly due to higher-than-expected demand and margins for used vehicles segment.

“Budget is well-positioned to survive a second wave of COVID-19 with its strong balance sheet, almost zero debt and a resilient business model,” the report said, adding the current situation in the Kingdom is comforting, as daily cases fall below 400 which will not call for the imposition of a curfew.

The brokerage also expected gradual quarter-on-quarter (QoQ) recovery for short term rental in Q4 2020, supported by Umrah resumption and less travel restrictions compared to the third quarter.

Itqan Capital maintained its “neutral” recommendation, raising the stock’s target price to SAR 36.5 from SAR 28.5 per share.