Earnings Report /
Saudi Arabia

Taiba: Highest quarterly revenue and profits since 2020

  • Revenues increased 152% yoy (+54.3% qoq) to reach SAR81.2mn in Q2 22.

  • Gross margins expanded significantly to 57.5% in Q1 22, and came higher than 32.8% in Q2 21.

  • Operating expenses in absolute terms decreased 73.4% yoy to SAR10.1mn vs SAR38.1mn in Q2 21.

SNB Capital
18 August 2022
Published bySNB Capital

Taiba reported a strong set of Q2 22 results with a net profit of SAR34.5mn, compared to net losses of SAR12.9mn in Q2 21. This is significantly higher than our estimate of a profit of SAR12.7mn. We attribute the variance in earnings to 1) higher than expected revenue driven by recovery in operations and the impact of Hajj season, 2) improvement in gross margins and 3) lower operational expenses due to reversal of provisions on receivables.

  • Revenues increased 152% yoy (+54.3% qoq) to reach SAR81.2mn in Q2 22, and came higher than our estimates of SAR61.9mn. This is the highest quarterly revenue since Q1 20. We believe the yoy increase and variance are mainly due to recovery in operations from the effects of COVID-19 and the impact of Hajj season.

  • Gross margins expanded significantly to 57.5% in Q1 22, and came higher than 32.8% in Q2 21 and our estimates of 44.0%. We attribute the yoy expansion and variance to improved top-line performance. As a result, gross profits increased to SAR46.7mn (+342% yoy, +114% qoq) vs our estimate of SAR27.2mn. We note this is the highest quarterly gross margins since Q3 20.

  • Operating expenses in absolute terms decreased 73.4% yoy to SAR10.1mn vs SAR38.1mn in Q2 21 and our estimate of SAR27.8mn. We believe the yoy decrease and variance were mainly due to reversal of ECL provisions on receivables. As a result, opex to sales stood at 12.5% vs 118% in Q2 21, and lower than our estimate of 45.0%.

  • Net non-operating expenses stood at SAR2.1mn compared to non-operating income of SAR14.6mn in Q2 21 and our estimate of SAR13.4mn. We believe this is driven by higher than expected losses from investments and associates.

Outlook

Based on our last update, we are Overweight on Taiba with a PT of SAR35.6. The growth in revenue and expansion in margins are the key positives of the results. We believe Taiba’s expansion plans and positive outlook of the Saudi tourism sector are the key stock drivers going forward. The stock currently trades at 2022f P/E and P/B of 55.3x and 1.3x, respectively.