Earnings Report /
Saudi Arabia

Taiba: Q3 22 Results Analysis | Recovery continues

  • Revenues increased 204% yoy (+11.9% qoq) to reach SAR90.9mn in Q3 22, and came higher than our estimates of SAR82.9mn.

  • Gross margins expanded significantly to 61.2% in Q3 22, and came higher than 34.9% in Q3 21 and our estimates of 57.0%.

  • Net non-operating income stood at SAR6.6mn compared to our estimate of SAR9.9mn and net non-opex of SAR8.2mn in Q3 21

SNB Capital
10 November 2022
Published bySNB Capital

Taiba reported a net profit of SAR42.8mn in Q3 22, compared to a net loss of SAR38.4mn in Q3 21. This is lower than the SNB Capital estimate of a profit of SAR46.4mn. Revenue increased 204% yoy (+81.2% qoq) and came higher than our estimate of SAR82.9mn, driven by recovery in core operations post the removal of COVID-19 restrictions. In addition, Hajj season positively affected the growth in hospitality and lease revenue. We attribute the variance in earnings to higher than expected opex which stood at SAR19.4mn vs our estimates of SAR10.8mn, due to increased marketing expenses. Subsequently, opex to sales stood at 21.3% vs our estimates of 13.0%. 

  • Revenues increased 204% yoy (+11.9% qoq) to reach SAR90.9mn in Q3 22, and came higher than our estimates of SAR82.9mn. This represents the highest quarterly revenue since Q3 19. We believe the yoy increase and variance mainly due to recovery in its core operations from the effects of COVID-19. In addition, Hajj season positively affected the growth in hospitality and lease revenue.

  • Gross margins expanded significantly to 61.2% in Q3 22, and came higher than 34.9% in Q3 21 and our estimates of 57.0%. We attribute the yoy expansion and variance in margins to improved top line performance. As a result, gross profits increased to SAR55.6mn (+10.5% yoy, +19.1% qoq) vs our estimate of SAR47.2mn. We note this is the highest quarterly gross margins since Q3 19.

  • Operating expenses in absolute terms decreased 52.2% yoy to SAR19.4mn vs SAR40.6mn in Q3 21 and our estimate of SAR10.8mn. We believe the yoy decrease in opex was mainly due to reversal of ECL provisions on receivables. As a result, opex to sales stood at 21.3% vs 136% in Q3 21, and higher than our estimate of 13.0%.

  • Net non-operating income stood at SAR6.6mn compared to our estimate of SAR9.9mn and net non-opex of SAR8.2mn in Q3 21. We believe the variance is driven by lower than expected income from investments and associates.

Outlook

Based on our last update, we are Overweight on Taiba with a PT of SAR36.3. 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 2023f P/E and P/B of 30.9x and 1.2x, respectively.