Riyadh – Mubasher: Al Rajhi Capital Research initiated its coverage of the Saudi Industrial Services Company’s (SISCO) stock with a target price (TP) of SAR 27 per share, with an ‘Overweight’ recommendation.

The research firm attributed the evaluation to SISCO being one of the largest players in the shipping, loading, and unloading services in Saudi Arabia that aligns well with the government’s initiative to make Saudi Arabia a leading regional logistics hub and increase the traffic through the Red Sea as a part of Saudi Vision 2030.

SISCO was recently awarded a contract from the Saudi Port Authority (Mawani) to develop and operate Jeddah Islamic Port for 30 years.

The deal will see SISCO invest SAR 1 billion over the next three years and will double the company’s handling capacity from a current 2.5 million TEU to 5.2 million TEU by 2024, thus making it the largest port service provider on the Red Sea, Al Rajhi Capital said in a research note on Sunday.

Al Rajhi Capital further expects other key business segments for SISCO to perform well in the coming years, such as logistics, parks services, and water solution services.

The reinstatement of inspection fees in 2019 and the removal of expat levy fees for industrial companies from 2020 further provide a significant push to SISCO’s profitability, the research firm explained, expecting a dividend pay-out ratio in the range of 40-50% that makes the stock further appealing for long-term investors.