Zain Saudi expected to maintain momentum, says Riyad Capital

Riyad Capital expects Zain Saudi to keep the momentum as the company posted excellent results recently following years of consecutive lose, it said in a research note.

The research firm maintained its “Buy” recommendation for Zain Saudi, and increased the target price from SAR 11.5 per share to SAR 15 per share.

“The firm posted the highest H1 revenue of SAR 4.2 billion on increased demand of services, which gives us, confidence,” Riyad Capital said.

“Changes in the regulatory environment have been beneficial while the firm’s debt and accumulated losses have been declining,” it added.

Zain’s revenue are expected to reach SAR 7.7 billion in 2019, while the company’s profit margins are set to soar in 2019 and 2020, as the firm is working towards being a telecom company rather than a infrastructure developer.

Going foreword, higher management fees, elevated costs of the fifth generation services, and failure to capital restructuring and tower sale are key risks facing the company, Riyad Capital predicted.