On March 27, the shares of Servair Abidjan, a company listed on the WAEMU’s stock market (BRVM), increased by 5.8%; putting an end to the continuous 11-day decline on the stock exchange. Although there are no specific triggers for this recovery, Servair Abidjan seems to attract investors engaged in the annuity strategy.

With the net dividend of CFA164.9 paid to shareholders as of September 2019, the company’s shares recorded a return of 16.5%. Assuming that the same amount or a higher dividend would be paid this year, the current share value offers a significant potential return for short- and mid-term investors.

At the end of the first half of 2019, the company's turnover was close to CFA6 billion, 8.1% higher than that of the same period in 2018. Net profit in H1 2019 was CFA797.7 million, up by about 40% YoY. If the trend had continued, the result for the 2019 financial year should improve substantially.

However, this business volume was driven by intra-group activities and those operated outside aircraft supply. The long period of decline is linked to the closure of both land and air borders, which raised the prospect of lower revenues and margins among investors. Côte d'Ivoire, like many countries in Africa, has indeed closed its air borders with several countries against the backdrop of the current covid-19 pandemic.

In addition to providing staff with meals and cleaning the planes, Servair Abidjan, a subsidiary of Switzerland-based Gategroup Holding, has been developing off-airport catering services since 2012. But the restrictions on activities imposed in Côte d'Ivoire also reduced business opportunities there.

All the eight African subsidiaries of Gategroup are facing the same challenges due to the coronavirus. It should be recalled that the group itself is controlled by the Singaporean sovereign fund Temasek and RRJ Capital, a private equity company focused on Asia, which manages several American pension funds.

Idriss Linge