Airline Services Limited (now known as Newrest ASL Nigeria) was incorporated as a private limited liability company on December 6, 1996. The company became a public limited liability company on February 26, 2007 and was listed on the Nigerian Stock Exchange on July 25, 2007.
Newrest ASL’s principal services are the provision of catering services to international airlines operating in the country.The company also operates VIP lounges at the Muritala Mohammed International Airport (MMIA) Lagos and the NnamdiAzikwe International Airport Abuja. In addition, its subsidiary Newrest ASL Oil and Gas Logistics Ltd provides oil and gas catering and logistics services to companies operating in the oil and gas services in the country.
Newrest ASL had last month released a notice announcing the sale of its entire stake in ASL Rwanda Limited. ASL Rwanda provides inflight catering and ancillary services at the Kigali International Airport, Rwanda. The Rwandan unit was a partnership with Rwandan air, and commenced operations on August 1, 2014. ASL had a 70% stake in the company, with Rwanda Air holding the rest.
The company did not give a reason for its action. The Rwandan stake had however been a key earner for the company.
Financial statements for the year ended December 2016 show Kigali operations accounted for 24% – N1.2 billion out of the N5 billion in revenues made by the company in 2016. Kigali operations also accounted for 25% or N897 million of the N3.5 billion in profit made in 2016. The stellar 2016 results were also driven by N800 million in foreign exchange gains, which are unlikely to reoccur this year.
The trend also continued for the half year ended June 2017. Kigali operations accounted for N1 billion or 37% of the N2.7 billion made in 2017. Kigali operations also accounted for 37% or N745 million of the N1.9 billion in profits made in 2017.
NewrestASL is currently trading at N7.51 in today’s session on the NSE, giving it a PE ratio of 4 times earnings. The stock is also trading at a price to book value of over 1000, suggesting it is overpriced. Year to date, the stock is up 184.7% The company is currently trading at 4 times earnings.
The significant upside the company’s shares have had, and the likelihood of a dropin earnings going forward due to a sale of the Rwanda sale make the stock a sell.
The recommendations above should not be taken as investment advice, nor the opinions of Nairametrics. Please consult your stockbroker, or investment adviser before taking a decison.