Saudi Airlines Catering Company
Catering Agriculture & Food Industries Sector CATERING AB - 6004.SE January 21, 2016
Saudi Airlines Catering Company Recommendation
Overweight
Fair Value (SAR)
00.711
Price as of January 21, 2016
99799
Expected Return
0.71%
Tadawul Symbol
6004.SE
Company Data 52 Week High (SAR)
202.75
52 Week Low (SAR)
82.00
YTD Change
219
3-Month Average Volume (Thousand Shares)
-23.8%
Market Cap. (SAR Million)
7,625
Market Cap. (USD Million)
2,033
Outstanding Shares (Million Shares)
82
Major Shareholders ( > 5% ) Saudi Arabian Airlines Corporation
007.1%
Strategic Catering Company
90700%
52-week Stock Price Movement Catering
Agriculture and Food
120
100 80
60 40
Source: Tadawul
ROS 40.0% 35.0%
575
30.0%
550
25.0%
525
20.0% 15.0%
500
According to the earnings release, the YoY rise in bottom line in Q4 2015 stemmed from the 4% growth in revenues with major contribution from growth in airline division revenue, particularly in business lounges revenue which skyrocketed 50% boosted by lounges opened in late 2014 and 2015. In addition, sky sales revenue progressed 19% enhanced by the newlyestablished airport shops, while inflight catering revenue grew 0.6. Non-airline revenue fell 2.7% due to lower sales from institutional business. Moreover, gross profit increased due to the higher revenues in addition to the decline in COGS percentage of sales as well as a provisions reversal of SAR 17.6 million.
SACC disbursed a cash dividend of SAR 1.75 per share starting from November 12, 2015 for Q3 2015. The dividends totalled SAR 143.5 million, representing 17.5% of paid in capital. SACC’s earnings figure for Q4 2015 missed our estimate of SAR 163 million and the analyst consensus of SAR 175 million.
Quarterly Sales (SAR mn) and ROS Sales
Saudi Airlines Catering Company (SACC) reported a net profit of SAR 190.7 million in Q4 2015 up from SAR 172.8 million in Q4 2014 surging 10.4% YoY, and 16% QoQ from SAR 164.5 million in Q3 2015. EBIT amounted to SAR 184 million in Q4 2015 nudging up 11.7% YoY and 15% QoQ. Annually, bottom line hit SAR 698.5 million compared to SAR 653.9 in 2014 shifting up 6.8%, while EBIT came in at SAR 668.9 million in 2015, jumping 3.5%.
Annually, total revenues surged 5.8% triggered by the growth in airline division revenue, particularly in business lounges revenue which were elevated by 47% in addition to sky sales revenue which increased 19%. Furthermore, non-airline business revenues soared 17% on higher Business & Industrial segment revenues. On the other hand, gross profit growth was slow impacted by the increase in personnel costs especially after disbursing two months extraordinary salary in 2015 to Saudi nationals.
Tadawul Index
140
600
Q4 2015
Although the quarter net income surpassed our estimate, we applied more conservative estimates for future revenues and profit margins, therefore our fair value has been downgraded from SAR 184 per share to SAR 157 per share with an “Overweight” recommendation.
10.0%
475
5.0%
450
0.0%
Source: Company Filings, Albilad Capital Research Estimates Turki Fadaak Research & Advisory Manager [email protected] Ahmed A. Hindawy, CFA Financial Analyst [email protected] Mohammed H. Atiyah Financial Analyst [email protected]
FY - Ending December
2013A
2014A
2015A
2016F
EV/EBITDA
11.76
10.44
10.20
9.95
EV/Sales
3.54
3.19
3.13
2.95
P/E
13.39
11.66
10.92
11.65
Dividend Yield
5.9%
7.3%
7.5%
8.1%
P/BV
6.58
6.22
5.78
5.58
P/Revenue
4.08
3.57
3.37
3.24
Current Ratio
3.41
3.41
3.47
3.68
10.7%
14.4%
5.8%
4.1%
Revenue Growth
Source: Company Filings, Albilad Capital Research Estimates
1
Catering Agriculture & Food Industries Sector CATERING AB - 6004.SE
January 21, 2016 Income Statement (SAR mn)
Q4 2014
Q4 2015
Growth
Total Revenues
535
579
3.9%
COGS
348
370
(7.5%)
SG&A
36
38
18.9%
Provisions
(18)
4
(104.0%)
EBITDA
170
166
12.7%
31.7%
28.7%
2.7%
5
6
44.3%
165
160
11.7%
8
5
(17.3%)
NAI
173
164
10.4%
ROS
32.3%
28.4%
2.0%
Balance Sheet (SAR mn)
Q4 2014
Q4 2015
Growth
Cash and marketable securities
780
509
(34.7%)
Accounts Receivables
85
103
21.8%
Inventory
87
142
64.1%
Others
616
580
(5.8%)
1,568
1,335
(14.8%)
Net Fixed Assets and Projects Under Implementation
191
458
139.2%
Others
50
55
9.2%
Total LT Assets
242
513
112.2%
1,809
1,848
2.2%
Accounts Payable
162
194
19.7%
Accrued Expenses
241
137
(43.4%)
Others
56
54
(4.9%)
Total ST Liabilities
460
384
(16.4%)
Noncurrent Liabilities
124
146
17.7%
Equity
1,226
1,318
7.5%
Total Liabilities and Equity
1,809
1,848
2.2%
Q4 2014
Q4 2015
Growth
Cash flow from Operations
272
297
9.2%
Cash flow from Financing
(142)
(140)
(1.0%)
Cash flow from Investing
(36)
39
(207.1%)
Change in Cash
94
196
108.5%
EBITDA Margin Depreciation and amortization EBIT Others (Net)
Total ST Assets
Total Assets
Cash Flow (SAR mn)
Source: Company Filings, Albilad Capital Research Estimates
* Estimated Figures Presentation of financial statements may differ from the company’s presentation. However, there is no impact on the final results.
2
Catering Agriculture & Food Industries Sector CATERING AB - 6004.SE
January 21, 2016 Income Statement (SAR mn)
2012A
2013A
2014A
2015A
2016F
Total Revenues
1,687.4
1,867.5
2,135.9
2,260.8
2,353.3
COGS
1,045.9
1,162.7
1,346.1
1,415.8
1,497.2
SG&A
122.4
148.7
169.1
167.7
176.3
Provisions
(3.5)
(5.3)
(31.1)
(16.2)
(19.3)
EBITDA
522.6
561.3
651.8
693.6
699.1
EBITDA Margin
31.0%
30.1%
30.5%
30.7%
29.7%
Depreciation and Amortization
15.9
15.5
18.5
24.7
75.6
EBIT
506.8
545.8
633.3
668.9
623.5
Others (Net)
(19.7)
23.5
20.6
29.6
30.8
NAI
487.1
569.4
653.9
698.5
654.3
ROS
28.9%
30.5%
30.6%
30.9%
27.8%
Balance Sheet (SAR mn)
2012A
2013A
2014A
2015A
2016F
Cash and marketable securities
1,022.1
882.8
780.0
509.4
632.5
Accounts Receivables
53.8
56.7
85.0
103.5
92.7
Inventory
73.3
76.6
86.8
142.4
113.4
Others
317.5
431.0
615.9
580.1
610.0
Total ST Assets
1,466.7
1,447.1
1,567.6
1,335.4
1,448.6
Net Fixed Assets
90.0
98.1
191.5
458.1
430.6
Others
0.0
150.2
50.2
54.8
54.8
Total LT Assets
90.0
248.3
241.7
512.9
485.4
1,556.8
1,695.4
1,809.3
1,848.2
1,934.0
Accounts Payable
151.6
140.5
162.4
194.4
198.3
Accrued Expenses
202.3
230.7
241.1
136.5
142.1
Others
35.7
53.2
56.3
53.6
52.9
Total ST Liabilities
389.6
424.4
459.8
384.4
393.3
Noncurrent Liabilities
105.4
112.4
123.8
145.6
173.1
Equity
1,061.7
1,158.6
1,225.7
1,318.2
1,367.7
Total Liabilities and Equity
1,556.8
1,695.4
1,809.3
1,848.2
1,934.0
Cash Flow (SAR mn)
2012A
2013A
2014A
2015A
2016F
Cash flow from Operations
786.2
500.4
442.5
580.6
776.0
Cash flow from Financing
(398.9)
(467.0)
(539.9)
(564.9)
(604.8)
Cash flow from Investing
(20.2)
(162.5)
(8.9)
(188.0)
(48.1)
Change in Cash
367.1
(129.1)
(106.3)
(172.3)
123.1
Total Assets
Source: Company Filings, Albilad Capital Research Estimates
Presentation of financial statements may differ from the company’s presentation. However, there is no impact on the final results.
3
Catering Agriculture & Food Industries Sector CATERING AB - 6004.SE
January 21, 2016
Albilad Capital Rating Methodology Al-Bilad Capital uses its own evaluation structure, and its recommendations are based on quantitative and qualitative data collected by the analysts. Moreover, the evaluation system places covered shares under one of the next recommendation areas based on the closing price of the market, the fair value that we set and the possibility of ascent/descent. Overweight:
The Target share price exceeds the current share price by ≥ 10%. We expect the share price to reach the Target price over the next 9-12 months
Neutral:
The Target share price is either more or less than the current share price by < 10% We expect the share price to reach the Target price over the next 9-12 months
Underweight:
The Target share price is less than the current share price by ≥ 10%. We expect the share price to reach the Target price over the next 9-12 months
To be Revised:
No target price had been set for one or more of the following reasons: waiting for more analysis, waiting for detailed financials , waiting for more data to be updated, major change in company`s performance, change in market conditions or any other reason from Albilad Capital Research.
Albilad Capital Client Services E-mail: Tel:
[email protected] +966-11-203-9888
Toll-free: 800-116-0001
Research & Advisory
E-mail: [email protected] Tel: +966-11-290-6250 Website: www.albilad-capital.com/en/research
Brokerage
Asset Management E-mail: Tel:
[email protected] +966-11-290-6280
E-mail: Tel:
[email protected] +966-11-290-6230
Investment Banking E-mail: Tel:
[email protected] +966-11-290-6256
Disclaimer AlBilad Capital exerted utmost efforts to ensure that the information included in this report is accurate and correct. However, AlBilad Capital Co., its managers, and staff bear no liability whether explicitly or implicitly for the content of the report and no legal responsibility, whether directly or indirectly, for any results based on it. This report should not be reproduced, redistributed, or sent directly or indirectly to any other party or published in full or in part for any purpose whatsoever without a prior written permission from AlBilad Capital. We would also like to note that this information in no way constitutes a recommendation to buy or sell banknotes or make any investment decisions. Any investment act taken by an investor based fully or partially on this report is the complete responsibility of the investor. This report is not meant to be used or seen as advice or an option or any other measure to be taken in the future. We recommend consulting a qualified investment advisor before investing in these investment tools. AlBilad Capital preserves all rights associated with this report.
4
Saudi Airlines Catering Company Recommendation
Overweight
Fair Value (SAR)
00.711
Price as of January 21, 2016
99799
Expected Return
0.71%
Tadawul Symbol
6004.SE
Company Data 52 Week High (SAR)
202.75
52 Week Low (SAR)
82.00
YTD Change
219
3-Month Average Volume (Thousand Shares)
-23.8%
Market Cap. (SAR Million)
7,625
Market Cap. (USD Million)
2,033
Outstanding Shares (Million Shares)
82
Major Shareholders ( > 5% ) Saudi Arabian Airlines Corporation
007.1%
Strategic Catering Company
90700%
52-week Stock Price Movement Catering
Agriculture and Food
120
100 80
60 40
Source: Tadawul
ROS 40.0% 35.0%
575
30.0%
550
25.0%
525
20.0% 15.0%
500
According to the earnings release, the YoY rise in bottom line in Q4 2015 stemmed from the 4% growth in revenues with major contribution from growth in airline division revenue, particularly in business lounges revenue which skyrocketed 50% boosted by lounges opened in late 2014 and 2015. In addition, sky sales revenue progressed 19% enhanced by the newlyestablished airport shops, while inflight catering revenue grew 0.6. Non-airline revenue fell 2.7% due to lower sales from institutional business. Moreover, gross profit increased due to the higher revenues in addition to the decline in COGS percentage of sales as well as a provisions reversal of SAR 17.6 million.
SACC disbursed a cash dividend of SAR 1.75 per share starting from November 12, 2015 for Q3 2015. The dividends totalled SAR 143.5 million, representing 17.5% of paid in capital. SACC’s earnings figure for Q4 2015 missed our estimate of SAR 163 million and the analyst consensus of SAR 175 million.
Quarterly Sales (SAR mn) and ROS Sales
Saudi Airlines Catering Company (SACC) reported a net profit of SAR 190.7 million in Q4 2015 up from SAR 172.8 million in Q4 2014 surging 10.4% YoY, and 16% QoQ from SAR 164.5 million in Q3 2015. EBIT amounted to SAR 184 million in Q4 2015 nudging up 11.7% YoY and 15% QoQ. Annually, bottom line hit SAR 698.5 million compared to SAR 653.9 in 2014 shifting up 6.8%, while EBIT came in at SAR 668.9 million in 2015, jumping 3.5%.
Annually, total revenues surged 5.8% triggered by the growth in airline division revenue, particularly in business lounges revenue which were elevated by 47% in addition to sky sales revenue which increased 19%. Furthermore, non-airline business revenues soared 17% on higher Business & Industrial segment revenues. On the other hand, gross profit growth was slow impacted by the increase in personnel costs especially after disbursing two months extraordinary salary in 2015 to Saudi nationals.
Tadawul Index
140
600
Q4 2015
Although the quarter net income surpassed our estimate, we applied more conservative estimates for future revenues and profit margins, therefore our fair value has been downgraded from SAR 184 per share to SAR 157 per share with an “Overweight” recommendation.
10.0%
475
5.0%
450
0.0%
Source: Company Filings, Albilad Capital Research Estimates Turki Fadaak Research & Advisory Manager [email protected] Ahmed A. Hindawy, CFA Financial Analyst [email protected] Mohammed H. Atiyah Financial Analyst [email protected]
FY - Ending December
2013A
2014A
2015A
2016F
EV/EBITDA
11.76
10.44
10.20
9.95
EV/Sales
3.54
3.19
3.13
2.95
P/E
13.39
11.66
10.92
11.65
Dividend Yield
5.9%
7.3%
7.5%
8.1%
P/BV
6.58
6.22
5.78
5.58
P/Revenue
4.08
3.57
3.37
3.24
Current Ratio
3.41
3.41
3.47
3.68
10.7%
14.4%
5.8%
4.1%
Revenue Growth
Source: Company Filings, Albilad Capital Research Estimates
1
Catering Agriculture & Food Industries Sector CATERING AB - 6004.SE
January 21, 2016 Income Statement (SAR mn)
Q4 2014
Q4 2015
Growth
Total Revenues
535
579
3.9%
COGS
348
370
(7.5%)
SG&A
36
38
18.9%
Provisions
(18)
4
(104.0%)
EBITDA
170
166
12.7%
31.7%
28.7%
2.7%
5
6
44.3%
165
160
11.7%
8
5
(17.3%)
NAI
173
164
10.4%
ROS
32.3%
28.4%
2.0%
Balance Sheet (SAR mn)
Q4 2014
Q4 2015
Growth
Cash and marketable securities
780
509
(34.7%)
Accounts Receivables
85
103
21.8%
Inventory
87
142
64.1%
Others
616
580
(5.8%)
1,568
1,335
(14.8%)
Net Fixed Assets and Projects Under Implementation
191
458
139.2%
Others
50
55
9.2%
Total LT Assets
242
513
112.2%
1,809
1,848
2.2%
Accounts Payable
162
194
19.7%
Accrued Expenses
241
137
(43.4%)
Others
56
54
(4.9%)
Total ST Liabilities
460
384
(16.4%)
Noncurrent Liabilities
124
146
17.7%
Equity
1,226
1,318
7.5%
Total Liabilities and Equity
1,809
1,848
2.2%
Q4 2014
Q4 2015
Growth
Cash flow from Operations
272
297
9.2%
Cash flow from Financing
(142)
(140)
(1.0%)
Cash flow from Investing
(36)
39
(207.1%)
Change in Cash
94
196
108.5%
EBITDA Margin Depreciation and amortization EBIT Others (Net)
Total ST Assets
Total Assets
Cash Flow (SAR mn)
Source: Company Filings, Albilad Capital Research Estimates
* Estimated Figures Presentation of financial statements may differ from the company’s presentation. However, there is no impact on the final results.
2
Catering Agriculture & Food Industries Sector CATERING AB - 6004.SE
January 21, 2016 Income Statement (SAR mn)
2012A
2013A
2014A
2015A
2016F
Total Revenues
1,687.4
1,867.5
2,135.9
2,260.8
2,353.3
COGS
1,045.9
1,162.7
1,346.1
1,415.8
1,497.2
SG&A
122.4
148.7
169.1
167.7
176.3
Provisions
(3.5)
(5.3)
(31.1)
(16.2)
(19.3)
EBITDA
522.6
561.3
651.8
693.6
699.1
EBITDA Margin
31.0%
30.1%
30.5%
30.7%
29.7%
Depreciation and Amortization
15.9
15.5
18.5
24.7
75.6
EBIT
506.8
545.8
633.3
668.9
623.5
Others (Net)
(19.7)
23.5
20.6
29.6
30.8
NAI
487.1
569.4
653.9
698.5
654.3
ROS
28.9%
30.5%
30.6%
30.9%
27.8%
Balance Sheet (SAR mn)
2012A
2013A
2014A
2015A
2016F
Cash and marketable securities
1,022.1
882.8
780.0
509.4
632.5
Accounts Receivables
53.8
56.7
85.0
103.5
92.7
Inventory
73.3
76.6
86.8
142.4
113.4
Others
317.5
431.0
615.9
580.1
610.0
Total ST Assets
1,466.7
1,447.1
1,567.6
1,335.4
1,448.6
Net Fixed Assets
90.0
98.1
191.5
458.1
430.6
Others
0.0
150.2
50.2
54.8
54.8
Total LT Assets
90.0
248.3
241.7
512.9
485.4
1,556.8
1,695.4
1,809.3
1,848.2
1,934.0
Accounts Payable
151.6
140.5
162.4
194.4
198.3
Accrued Expenses
202.3
230.7
241.1
136.5
142.1
Others
35.7
53.2
56.3
53.6
52.9
Total ST Liabilities
389.6
424.4
459.8
384.4
393.3
Noncurrent Liabilities
105.4
112.4
123.8
145.6
173.1
Equity
1,061.7
1,158.6
1,225.7
1,318.2
1,367.7
Total Liabilities and Equity
1,556.8
1,695.4
1,809.3
1,848.2
1,934.0
Cash Flow (SAR mn)
2012A
2013A
2014A
2015A
2016F
Cash flow from Operations
786.2
500.4
442.5
580.6
776.0
Cash flow from Financing
(398.9)
(467.0)
(539.9)
(564.9)
(604.8)
Cash flow from Investing
(20.2)
(162.5)
(8.9)
(188.0)
(48.1)
Change in Cash
367.1
(129.1)
(106.3)
(172.3)
123.1
Total Assets
Source: Company Filings, Albilad Capital Research Estimates
Presentation of financial statements may differ from the company’s presentation. However, there is no impact on the final results.
3
Catering Agriculture & Food Industries Sector CATERING AB - 6004.SE
January 21, 2016
Albilad Capital Rating Methodology Al-Bilad Capital uses its own evaluation structure, and its recommendations are based on quantitative and qualitative data collected by the analysts. Moreover, the evaluation system places covered shares under one of the next recommendation areas based on the closing price of the market, the fair value that we set and the possibility of ascent/descent. Overweight:
The Target share price exceeds the current share price by ≥ 10%. We expect the share price to reach the Target price over the next 9-12 months
Neutral:
The Target share price is either more or less than the current share price by < 10% We expect the share price to reach the Target price over the next 9-12 months
Underweight:
The Target share price is less than the current share price by ≥ 10%. We expect the share price to reach the Target price over the next 9-12 months
To be Revised:
No target price had been set for one or more of the following reasons: waiting for more analysis, waiting for detailed financials , waiting for more data to be updated, major change in company`s performance, change in market conditions or any other reason from Albilad Capital Research.
Albilad Capital Client Services E-mail: Tel:
[email protected] +966-11-203-9888
Toll-free: 800-116-0001
Research & Advisory
E-mail: [email protected] Tel: +966-11-290-6250 Website: www.albilad-capital.com/en/research
Brokerage
Asset Management E-mail: Tel:
[email protected] +966-11-290-6280
E-mail: Tel:
[email protected] +966-11-290-6230
Investment Banking E-mail: Tel:
[email protected] +966-11-290-6256
Disclaimer AlBilad Capital exerted utmost efforts to ensure that the information included in this report is accurate and correct. However, AlBilad Capital Co., its managers, and staff bear no liability whether explicitly or implicitly for the content of the report and no legal responsibility, whether directly or indirectly, for any results based on it. This report should not be reproduced, redistributed, or sent directly or indirectly to any other party or published in full or in part for any purpose whatsoever without a prior written permission from AlBilad Capital. We would also like to note that this information in no way constitutes a recommendation to buy or sell banknotes or make any investment decisions. Any investment act taken by an investor based fully or partially on this report is the complete responsibility of the investor. This report is not meant to be used or seen as advice or an option or any other measure to be taken in the future. We recommend consulting a qualified investment advisor before investing in these investment tools. AlBilad Capital preserves all rights associated with this report.
4
