SAHCO: Analysts See Upside Potential on Strong Earnings Profile
Skyway Aviation Handling Company’s share price declined by more than 11% as investors exited positions amidst strong earnings performance in 2024.
Share price closed the week at N59, down by 11.1445% last week in a reversed reaction to the company’s rhythmic earnings performance. According to analysts, SAHCO appears to be undervalued when compared with its peer quoted price in the Nigerian Exchange.
In the latest rush, investors raised bets on the stock, which hit its 52-week high of N66.4 – before it retreated in the latest trading round in the equities market.
Hence, the company’s market value reduced to N79.861 billion in the Nigerian market, creating fresh entry point for investors seeking companies with strong upside potential.
Skyway Aviation Handling Company’s earnings scorecard for 2024 showed a remarkable turnaround and upward trajectory in its key financial metrics.
The aviation ground handling service provider closed the year with a commendable performance that speaks to its operational resilience, strategic efficiency, and aggressive revenue generation.
SAHCO’s revenue for the year under review climbed from N16.55 billion in 2023 to a robust N28.94 billion in 2024, marking a 9% increase.
This impressive revenue expansion was attributed to a significant boost in business operations, particularly due to an increase in aircraft handling volumes, cargo throughput, and ancillary services, which remain the core of the company’s value chain.
The robust topline growth underscores SAHCO’s strengthened market positioning and improved customer engagement in the aviation handling space, amidst recovering global air travel post-COVID-19 disruptions.
Perhaps the most eye-catching figure in SAHCO’s financial report is the doubling of gross profit, which soared from N8.10 billion to N16.38 billion—a 102% year-on-year increase.
This leap significantly outpaced the revenue growth rate and signals enhanced cost management and pricing strategy. Gross profit margin also improved dramatically, reflecting more efficient service delivery and optimised client billing structures.
However, this stellar revenue growth came with increased costs. The company’s direct cost surged from N8.35 billion to N12.56 billion, reflecting higher operational volumes and inflationary pressures.
Likewise, administrative expenses almost doubled, moving from N5.47 billion to N10.05 billion. According to company insiders, this was largely due to investments in operational expansion, personnel remuneration, digital infrastructure, and compliance costs tied to industry regulations.
Despite the cost upticks, SAHCO’s Profit Before Tax (PBT) grew remarkably by 146%, rising from N2.63 billion in 2023 to N6.49 billion in 2024.
This healthy buffer underscores the company’s ability to translate revenue into sustainable profits, reinforcing investor confidence and long-term viability.
Profit for the year more than doubled, reaching N4.83 billion from N1.95 billion—another strong indicator of financial robustness and strategic cost containment.
The company’s balance sheet tells a compelling story of growth and stability. Total assets increased significantly from N34.07 billion to N41.78 billion, reflecting capital investments, asset revaluations, and improved liquidity.
Notably, SAHCO reduced its borrowings from N3.40 billion to N2.74 billion in 2024. This strategic debt trimming is a clear demonstration of management’s commitment to prudent financial management and operational self-reliance.
Retained earnings also surged from N6.30 billion to N10.82 billion, providing a strong buffer for future reinvestments and shareholder rewards.
Shareholders had reasons to cheer as dividend per share doubled to 60 kobo in 2024 from 30 kobo in the prior year. Earnings per share (EPS) also rose significantly from N1.46 to N3.57, reflecting increased profitability and earnings quality.
Return on Capital Employed (ROCE) grew from 9% to 17%, showcasing more efficient utilisation of capital to generate returns—a critical indicator of corporate performance in capital-intensive industries like aviation handling.
SAHCO’s market capitalisation jumped to N45.28 billion in 2024, up from N34.31 billion, driven by a rise in share price from N25.35 to N33.45. This reflects positive investor sentiment and confidence in the company’s future earnings potential.
Investor Outlook: A Clear ‘BUY’ or ‘ACCUMULATE’ Signal
Given SAHCO’s strong financial showing and prudent management practices, analysts are already recommending a “BUY” or “ACCUMULATE” position on the stock.
When compared to its closest industry peer, Nigerian Aviation Handling Company (NAHCO), SAHCO appears undervalued despite a stronger earnings profile.
For investors seeking exposure in the aviation support services sector, SAHCO presents a compelling case: strong fundamentals, dividend consistency, reduced leverage, and capital appreciation potential.
SAHCO’s 2024 financials reflect a company in ascension—financially sound, operationally efficient, and investor-friendly.
With strategic expansion, debt reduction, and robust profit growth, the aviation ground handling giant is well-positioned to capitalise on emerging opportunities in the aviation sector. For shareholders and potential investors alike, the runway looks clear for takeoff. #SAHCO: Analysts See Upside Potential on Strong Earnings Profile#
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