Still Bearish/Cautious; Stick With Defensives Since late-February (2/25/25 Compass and 2/27/25 Int'l Compass) we had been expecting an 8-10% pullback to provide a buying opportunity. However, after getting the 10%+ pullback, we discussed in our 4/1/25 Compass and 4/3/25 Int'l Compass how we no longer saw it as a buying opportunity, and we downgraded our outlook to bearish/cautious, citing several concerning developments. A historic selloff ensued. We then discussed last week (4/8/25 Compass) ho...
We upgrade Mobily to Overweight with a revised PT of SAR50.0. The ongoing digitization initiatives, margin expansion, deleveraging and higher dividends are expected to drive the stock going forward. We expect net income to record a 3-year CAGR of 12.6% during 2022-2025f to reach SAR2.37bn while EBITDA margin is expected to expand from 40.0% in 2022 to 41.5% in 2025f. The stock is trading at 2023f P/E and EV/EBITDA of 18.9x and 6.6x vs the sector average of 16.6x and 7.0x, respectively. DIGITI...
Mobily reported a strong set of Q4 22 results with net income increasing by 88.9% yoy (+62.7% qoq) to SAR606mn. This is significantly higher than the SNB Capital and consensus estimates of SAR401mn and SAR320mn, respectively. The variance is mainly attributed to 1) higher than expected gross margins, which expanded by 215bps yoy to 60.3% vs our estimates of 59.0%, and 2) lower depreciation expense which stood at SAR843mn vs SAR1.0bn in Q4 21 and our estimates of SAR950mn. * Revenues increas...
STC reported a weaker than expected set of Q4 22 results. Although net income increased by 5.5% yoy (-22.1% qoq) to SAR2.76bn, it was lower than the SNB Capital and consensus estimates of SAR3.07bn and SAR2.8bn, respectively. Revenues increased by 8.6% yoy (+3.4% qoq) to SAR17.03bn and came in-line with our estimates. However, we believe the variance in earnings was mainly due to higher opex. Therefore, EBITDA margins contracted by 448bps yoy to 32.3% vs our estimates of 37.3%. * Revenues i...
We upgrade STC to Overweight with a revised PT of SAR42.5. We believe the focus to transform to technology, asset monetization programs, and strong revenue growth from its subsidiary Solutions will drive STC going forward. Moreover, the completion of the towers deal and the potential increase in dividends are the short-term catalysts. We expect the company to record revenue and net income CAGR of 5.3% and 7.9% during 2021-24f to reach SAR74bn and SAR14.2bn, respectively. The stock is trading ...
Mobily reported a better than expected set of Q3 22 results with net income increasing by 32.7% yoy (+3.8% qoq) to SAR373mn. This is higher than the SNB Capital and consensus estimates of SAR333mn and SAR358mn, respectively. Revenues increased 6.2% yoy (-1.8% qoq) in-line with our estimates, mainly driven by growth in all business segments, FTTH and overall subscribers base. The positive variance in earnings is mainly attributed to 1) lower depreciation and impairment expenses which stood at ...
We host an earnings call with Mobily on Tuesday 25 October 2022 Dial in at 12:00 pm (GMT), 01:00 pm (London), 08:00 am (New York), 04:00 pm (Dubai) Hosted by Talha Nazr Dial- in Details Webex Link Access Code – 2392 294 2730 Password – Q32022
EARNINGS CALL SUMMARY - STC H1 22 Below are the key highlights of STC’s H1 22 earnings call. I have attached our Q2 22 event flash report for your reference. FINANCIAL OVERVIEW * STC’s revenue grew by 7.4% yoy to SAR33.8bn in H1 22, driven by healthy growth across all business segments. * Gross profits in H1 22 increased 8.4% yoy while gross margins expanded by 50bps yoy to 54.0% mainly due to cost control measures by STC KSA, Bahrain and Kuwait. * STC operating profit in H1 22 inc...
STC reported a broadly in-line set of Q2 22 results with net income increasing marginally by 0.6% yoy (-6.5% qoq) to SAR2.84bn. This compares to the SNB Capital and consensus estimates of SAR3.10bn and SAR3.06bn, respectively. Revenue increased by 6.5% yoy (-0.3% qoq) to SAR16.94bn and came in-line with our estimates of SAR17.17bn. EBITDA and EBIT margins remained inline. The variance in earnings is mainly driven by the increase in losses from share in results of associates to SAR283mn vs our...
STC TO BONUS ISSUE, A POSITIVE STOCK MOMENTUM STC BoD recommended to increase its capital 150% to SAR50bn, through the issuance of bonus shares via capitalizing SAR30bn from retained earnings. The company further added that the capital increase will help it in achieving its growth and expansion strategy. OUR VIEW * We believe this step should prove beneficial for the company in the long run, as it looks to pivot away from a traditional telecom service provider to a technology company. STC ha...
We remain Neutral on Mobily with a PT of SAR42.0. Higher contribution from Enterprise business and growth in religious tourism are expected to support the topline, while the progress in Etisalat offer is expected to be the key stock driver in the short-term. We expect net income to record a CAGR of 12.8% in 2021-24f to reach SAR1.54bn by 2024f. The stock is trading at 2022f P/E and EV/EBITDA of 22.9x and 6.7x, compared to the peer group average of 27.9x and 6.9x, respectively. ETISALAT OFFER,...
ETIHAD ETISALAT (SA), a company active in the Mobile Telecommunications industry, is favoured by a more supportive environment. The independent financial analyst theScreener has confirmed the fundamental rating of the title, which shows 4 out of 4 stars, as well as its unchanged, defensive market behaviour. The title leverages a more favourable environment and raises its general evaluation to Positive. As of the analysis date February 25, 2022, the closing price was SAR 34.75 and its potential w...
We remain Neutral on Taiba with a PT of SAR36.3. Although Taiba faced headwinds in 2020 and 2021f due to the impact of COVID-19, we expect a recovery in 2022f following the reduction of COVID-19 restrictions. Therefore, we expect a net income of SAR64.3mn in 2022f and SAR108mn in 2023f. Moreover, the potential merger with Dur and implementation of IAS 40 are key short-term catalysts. The stock trades at a slight discount to its Market NAV at 0.99x. * Positive data from CITC: Based on CITC re...
The general evaluation of SAUDI TELECOM (SA), a company active in the Integrated Telecommunications industry, has been upgraded by the independent financial analyst theScreener with the addition of a star. Its fundamental valuation now shows 4 out of 4 possible stars while its market behaviour can be considered as moderately risky. theScreener believes that the additional star(s) merits the upgrade of its general evaluation to Slightly Positive. As of the analysis date August 24, 2021, the closi...
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
Mobily reported an in-line set of Q2 21 results with a net income of SAR244mn, up 31.8% yoy (+8.0% qoq). This is broadly in-line with the SNB Capital and consensus estimates of SAR254mn and SAR258, respectively. The growth in earnings is attributed to a steady revenue growth of 4.8% yoy and lower expenses. * Revenues came in at SAR3.73bn, up 4.8% yoy (+3.5% qoq) and was in-line with our estimates. The company attributed the growth to higher income from the business unit, improvement in consu...
Mobily reported a strong earnings growth of 73.8% yoy (-8.1% qoq) to SAR226mn in Q1 21. However, it was lower than the NCBC and consensus estimates of SAR250mn and SAR253mn, respectively. Although revenues of SAR3.6bn were slightly higher than our estimates, the deviation is primarily on account of higher than expected financial and other expenses. REVENUES INCREASED BY 0.1% YOY (2.0% QOQ) TO SAR3.6BN AND WERE MARGINALLY HIGHER THAN OUR ESTIMATES OF SAR3.5BN The increase is mainly attributabl...
STC reported a broadly in-line set of Q4 20 results, with net income increasing +15.6% yoy (-3.0% qoq) to SAR2.68bn. This compares to the NCBC and consensus estimates of SAR2.52bn and SAR2.67bn, respectively. We believe the strong revenue growth of +14.7% yoy was offset by lower margins which declined from 63.0% in Q4 19 to 55.8% in Q4 20. We believe this is attributed to higher access charges and device sales. Revenues increased +14.7% yoy (+2.2% qoq) to SAR15.2bn and came broadly in-line wi...
Stock fairly captures 2020 strong operational results. Mobily’s share rose 52% since Mar-21, despite the tough macro-economic pressures, as it was one of the few operators that grew its 9M20 y-o-y top line and EBITDA to 6% and 5%, respectively, on the enterprise and fixed broadband segments. This was accompanied by an increase in total profitability, due to the refinancing that took place in 2019, cutting interest charges by 38% y-o-y in 9M20, and the market speculation on dividend distribution,...
High valuation, but remains Tadawul’s favourite. stc trades on a 2021x EV/EBITDA of 9.0x, significantly higher than the 5.8x peer average. However, we are of the view that stc’s current premium will prevail on the back of its: i) size in the Saudi market, ii) stable dividend policy with a sustainable yield of 4%, iii) asset monetisation plan, iv) strong balance sheet, and iv) exposure to new projects and regional expansion in the ICT business. EBITDA to grow, on healthier revenue mix. We expect...
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