NCB Capital, the Kingdom’s largest asset manager, has issued its report on the Saudi religious tourism sector.
According to the report, the roadmaps of Vision 2030 and the National Transformation Program 2020 (NTP 2020) will make this sector a major beneficiary of economic growth and development in the Kingdom.
“Religious tourism has been a key area of focus and will continue to be so going forward, capitalizing on the large infrastructure investments over the last decade in Makkah, Madinah and Jeddah,” Iyad Ghulam, NCB Capital equity research analyst, said.
“Saudi Arabia is planning to increase the number of Haj and Umrah pilgrims by 39 percent and 150 percent, respectively by 2020. This initiative will be a key growth driver for companies operating in this sector such as Saudi Airlines Catering, SGS and Al-Tayyar. We expect the net income of these companies to grow between 4.3-17 percent in 2017, driven by the expansion of local airline fleets, new airlines and new hotels commencing operations,” he added.
Consequently, NCB Capital has initiated coverage of Saudi Ground Services Company (SGS) with an “overweight” rating and a PT of SR103.4 ($27.5) while designating “overweight” ratings to SGS and Al-Tayyar and PTs of SR60.8 and SR40, respectively.
Saudi Airlines Catering
It is one of the first Saudi Airlines divisions to privatize as part of the airline’s overall privatization plan. Saudi Airlines Catering provides catering and related services to Saudi and other airlines flying in and out of the Kingdom. The company’s activities are divided across two major divisions, the airline division and the non-airline division. The non-airline division primarily provides catering and other related services to non-airline customers, including universities, large corporates and remote oil fields and, during the Haj and Umrah seasons, to pilgrims.
“Catering operates in five different segments which include Sky Sales, airport lounge operations and non-airline catering. Sky Sales are expected to grow at a CAGR of 5.9 percent between 2016-2020 supported by the expansion of retail shops in airports. Non-airline catering sales will be driven mainly by religious tourism and demand from sites in remote areas. The company is also planning to expand operations to railway catering services, security and restaurants. We believe this will help in reducing the dependency on Saudia which represented 66.9 percent of total revenues in 2016,” wrote Ghulam.
According to the report, the roadmaps of Vision 2030 and the National Transformation Program 2020 (NTP 2020) will make this sector a major beneficiary of economic growth and development in the Kingdom.
“Religious tourism has been a key area of focus and will continue to be so going forward, capitalizing on the large infrastructure investments over the last decade in Makkah, Madinah and Jeddah,” Iyad Ghulam, NCB Capital equity research analyst, said.
“Saudi Arabia is planning to increase the number of Haj and Umrah pilgrims by 39 percent and 150 percent, respectively by 2020. This initiative will be a key growth driver for companies operating in this sector such as Saudi Airlines Catering, SGS and Al-Tayyar. We expect the net income of these companies to grow between 4.3-17 percent in 2017, driven by the expansion of local airline fleets, new airlines and new hotels commencing operations,” he added.
Consequently, NCB Capital has initiated coverage of Saudi Ground Services Company (SGS) with an “overweight” rating and a PT of SR103.4 ($27.5) while designating “overweight” ratings to SGS and Al-Tayyar and PTs of SR60.8 and SR40, respectively.
Saudi Airlines Catering
It is one of the first Saudi Airlines divisions to privatize as part of the airline’s overall privatization plan. Saudi Airlines Catering provides catering and related services to Saudi and other airlines flying in and out of the Kingdom. The company’s activities are divided across two major divisions, the airline division and the non-airline division. The non-airline division primarily provides catering and other related services to non-airline customers, including universities, large corporates and remote oil fields and, during the Haj and Umrah seasons, to pilgrims.
“Catering operates in five different segments which include Sky Sales, airport lounge operations and non-airline catering. Sky Sales are expected to grow at a CAGR of 5.9 percent between 2016-2020 supported by the expansion of retail shops in airports. Non-airline catering sales will be driven mainly by religious tourism and demand from sites in remote areas. The company is also planning to expand operations to railway catering services, security and restaurants. We believe this will help in reducing the dependency on Saudia which represented 66.9 percent of total revenues in 2016,” wrote Ghulam.
