reports
- Talha Nazr
Seera Group: Q3 22 Results Analysis | First quarterly profit since FY ...
Seera returned to profit in Q3 22 with a net profit of SAR54mn in Q3 22 vs losses of SAR72mn and SAR68mn in Q3 21 and Q2 22 respectively. This compares to the SNB capital and consensus estimates of losses of SAR34mn and SAR30mn respectively. Seera recorded its first net profit post pandemic in Q3 22. Gross Booking Value (GBV) increased by 93% yoy to SAR2.7bn, with strong yoy growth across the segments driven by the increase in travel demand. Seera’s revenues increased by 53.1% yoy (-0.7% qoq)...
- Talha Nazr
Seera Group: Q3 22 – Well positioned for growth
We remain Neutral on Seera with a PT of SAR21.8. The tourism industry is witnessing a major recovery with a positive long-term outlook, supported by Saudi tourism strategies. In addition, the potential investment by PIF in Almosafer, Lumi IPO and the World Cup are the main catalysts for Seera in the coming period. We expect revenues to bounce back in 2022f and to record a CAGR of 34.4% between 2021-24f, leading to profits of SAR272mn in 2024f. The stock trades at 2023f EV/EBITDA of 9.9x lower...
- Iyad KhalidÊGhulam
Seera Group: Re-opening further boosts GBV growth in Q3 21
Seera reported a net loss of SAR72mn in Q3 21, compared to losses of SAR180mn in Q3 20 and SAR98mn in Q2 21. This also compares to the SNB Capital and consensus estimates of losses of SAR57mn. In Q3 21, Seera recorded a 112% yoy (+22% qoq) growth in GBV to SAR1.4bn, driven by the strong recovery of domestic and international travel with the reopening of Saudi borders and resumption of tourist visa issuance in August 2021. We believe that the growth in revenue was offset by higher-than-expecte...
- Iyad KhalidÊGhulam
Seera Group: Positive outlook against short-term uncertainty
We downgrade Seera to Neutral from Overweight, with a revised PT of SAR21.6. We believe the new Saudi transport strategy improves the company’s long-term prospects due to the expected positive impact on the tourism sector. However, we do highlight that the near-term operating environment remains highly uncertain due to COVID-19 impact on the industry. The stock trades at 2022f EV/EBITDA of 12.2x higher than the peers average of 10.8x, a premium that we believe factors in the positive outlook ...
- Ahmed Soliman
SEERA AB | Headwinds ahead; Cut to Neutral
Downgrade to Neutral post COVID-19. We cut our TP by 36% and downgrade our rating to Neutral, as we: i) reflect major pressures over 2020-21e due to the impact of COVID-19 on the company’s operations and cash flows, and ii) raise our equity risk premium by 1% to 8% to account for the heightened risk aversion. Our Neutral call is long-term, as Seera Group trades on a 2023e normalised P/E of 11.9x, in line with the industry’s historical average levels. Deep in losses over 2020-22e; Gradual recove...
- Iyad KhalidÊGhulam
Altayyar: Careem proceeds to offset COVID-19
We maintain our Overweight rating on Altayyar (Seera)with a revised PT of SAR17.7. Although COVID-19 is a major short-term headwind, it will be mitigated by proceeds of Careem sale. The long-term outlook for Seera is positive, supported by the strong potential of the Saudi tourism sector and the growth in the number of pilgrims. The stock is trading at P/B of 0.6x, which we believe is not justified. COVID-19; travel industry impacted the most:The rapid spread of COVID19 has had a severe impac...
- Ahmed Soliman
Uber-Careem deal complete; Upgrade to OW
Completion of Uber-Careem deal adds SAR6.00/share to our TP. We raise our TP by SAR6.00/share (c29%) and upgrade our rating to OW from N, as we account for the recent acquisition of Careem Inc. by Uber for USD3.1bn on 2 January (our operating assumptions and FCFF remain unchanged). The deal was completed directly upon obtaining regulatory approval in Egypt, which was a long time pending (and, as such, was not taken into account in our previous valuation). Seera Group owns 15.3% of Careem Inc., e...
- Ahmed Soliman
Downgrade to Neutral on rising costs; Uber-Careem deal the main upside
Cut TP by c6% on rising costs. We cut our TP by c6% and downgrade our rating to Neutral as we account for the company’s rising service costs and SG&A expenses. Against this, we roll over our DCF and cut our discount rate assumption by 220bps to 2.5%, to reflect the global monetary easing dynamics. Seera’s share price rallied 29% y-o-y, and currently trades on a 2020e P/E of 19x, falling to 16.4x in 2021e, in line with global peers, adjusted for growth. This leaves limited upside, in our view. S...
- Ahmed Soliman
Undemanding valuation; Recent headwinds pose an overhang to rerating
Government refrains from extending key contract with ATG. On 25 September, ATG announced that its key contract with the Ministry of Higher Education (MoHE) will not be renewed. The contract was instrumental to ATG’s profitability since its inception in 2005, representing 21% of the company’s revenue in 2017, and 17% in 1H18. In our view, the non-extension of the contract with ATG signals imminent loss of other government revenue streams (c16% of 2018e top line on our estimate). Accordingly, we c...
- Ahmed Soliman
Sell-off overdone; Upgrade to Overweight
An attractive entry point. ATG’s share price shed c21% since 5 November, underperforming the market by c21%, as the founder, former Managing Director and largest shareholder (29.7% total direct and indirect ownership), Nasser Al Tayyar, was detained after a nationwide corruption purge. The sharp sell-off is unjustified, in our view, which is why we believe the current share price poses an attractive entry point. We maintain our forecasts and TP, while upgrading our rating to Overweight from Neut...
- Ahmed Soliman
Unfavourable dynamics priced-in; Upgrade to Neutral
Raise to Neutral on valuation, unchanged TP of SAR36.0/share. We reduce our gross government bookings forecasts by c34% over a 5-year horizon to reflect a sharper deterioration than we had envisioned. Against this, we: 1) raise retail booking forecasts by 22.4% over our horizon given the robust expansion of ATG’s online booking platform (gross 2019e sales of SAR2.2bn vs. SAR0.5bn in 2016, 50% is assumed cannibalization of brick-and-mortar) and, 2) roll-over our DCF. The net impact is a 13.6% hig...
- Ghada JENDOUBI
2016, a year to forget
During Q4 2016, Al Tayyar recorded a 6,8% sales decline to SAR2.03bn vs. SAR2.18bn in the same quarter last year. This decrease is mainly due to a drop in the sales of the traditional travel sector and domestic tourism, as well as a decrease in the average ticket price due to massive discounts given by the airlines. Furthermore, the group posted a net income of SAR144.7m, i.e. a significant drop of 32.8%, yoy, on the back of a decline in the margins for some services in order to protect and inc...
- Khaled Sadek
Downgrade to Underweight on margin pressure
Core-travel margins pressured. ATG’s core-travel gross margin contracted by c400bps y-o-y in 4Q16 to 15.4% averaging 18.5% in 2016, down from 21.0% in 2015, as fiscal and corporate spending cuts led to higher-than-expected ticket downgrades across both corporate and retail. We expect margins to continue to deteriorate (the 2017 budget allocation on education is down 3.4% y-o-y), reducing our gross margin estimate for ATG’s core-travel segment (97% of 2017 revenue) by an average of 220bps over ou...
Ford Equity International Rating and Forecast Report
Ford Equity International Research Reports cover 60 countries with over 30,000 stocks traded on international exchanges. A proprietary quantitative system compares each company to its peers on proven measures of business value, growth characteristics, and investor behavior. Ford's three recommendation ratings buy, hold and sell, represent each stock’s return potential relative to its own country market.. The rating reports which are generated each week, include the fundamental details behind...
- Ahmed Soliman
Stay Neutral on negative earnings outlook, risk to KASP contract
Cut TP by 5% as top/down dynamics worsen. Main forecast changes include: i) a 7.3% downward revision to retail revenue over 2017-22e, ii) a 400bps gross margin cut at ATG’s high-margin government and corporate segments to 22% over our 6-year forecast horizon, iii) working capital buildup in 2016-18e, iv) weakening average daily rate (ADR) in Mecca, where the majority of ATG’s hospitality units are located, and v) a higher RfR assumption of 4.7% up from 4.2% previously.
- Ghada JENDOUBI
Not in good shape
During Q3 2015, Al Tayyar recorded a sales decline of 4.4% to SAR1,822.6m compared to SAR1906.8m in the same quarter last year. The group posted a net income of SAR187.8m, down 29.1% compared to Q3 2015. The company closed the first nine months with a revenue drop of 6.8% yoy to SAR6,002.1m due to a sharp decline (-6.8%) in the airline tickets, travel and tourism reservations. However, the transportation Segment witnessed a progression of around 49% to reach SAR120.76m.
- Ahmed Soliman
Fragile outlook explains discount; initiate at Neutral
Cheap for a reason. We initiate coverage with a Neutral rating (vs. a consensus Buy) on air travel service provider Al Tayyar Travel Group (ATG) on the grounds of a negative earnings outlook and risks related to M&A in hospitality. The stock price fell 48% y-t-d, implying a 2016e EV/EBITDA of 5.3x—a 36% below global peers explained by a 2015-17e EBITDA CAGR of - 5.5% vs. 14.3% for the industry. Scope for further downgrades, in our view, outweighs the likelihood of upward revisions.
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