Salik Company PJSC: Navigating Through Uncertain Waters

Salik Company PJSC, the exclusive toll gate operator in Dubai, has recently been under the spotlight following a letter from its CEO, Mr. Ibrahim Sultan Al Haddad, to the CEO of Dubai Financial Market. The letter informed of an upcoming Board of Directors meeting scheduled for December 7, 2023, to discuss and approve normal business activities. This seemingly routine event, however, raises concerns given the company's recent yield performance. Over the past three months, Salik's yield has dipped to -0.05%, indicating a negative return on investment. Even more concerning, the one-month yield has barely registered a positive figure, standing at 0.02%. This trend might suggest a potential slowdown in the company's operations or revenue generation. Salik, which operates eight automatic toll gates throughout Dubai, holds a significant market cap of 24 billion. It enjoys a 49-year concession agreement with the RTA, granting it the exclusive right to operate current and future toll gates across the Emirate of Dubai. Despite this strong market position, the company's recent yield performance casts a shadow over its future prospects. The upcoming Board of Directors meeting could be a pivotal moment for the company. While it's expected to cover 'normal business activities', it may also address the company's recent performance and future strategies. Investors and stakeholders will be keenly watching for any significant announcements or strategic shifts. Given the current circumstances, it may be prudent for investors to adopt a cautious approach. The company's recent yield performance, coupled with the uncertainty surrounding the upcoming board meeting, paints a somewhat gloomy picture of the future. While Salik's market position and exclusive operating rights provide some level of security, the potential risks cannot be overlooked. In light of the above, our recommendation for Salik Company PJSC would be to hold. This approach allows investors to monitor the company's situation closely while avoiding potential losses from a premature sale or risky purchase.