Zain Saudi's Q4 2018 profits beat estimates: Riyad Cap

Mobile Telecommunications Company Saudi Arabia’s (Zain Saudi) Q4 2018 net profit of SAR 399 million came in higher than Riyad Capital and consensus estimates of SAR 234 million and SAR 255 million, respectively.

“A higher topline breaching SAR 2 billion coupled with an estimated reversal of commercial fees of SAR 300 million (versus SAR 220 million estimate) were the primary reasons for the deviation,” the brokerage said in a note.

The telco’s Q4 revenue rose a 19 percent year-on-year (YoY) to SAR 2.05 billion, beating Riyad Capital’s estimate of SAR 1.8 billion.

The report said, citing CITC data that the company has managed to maintain the number of subscribers at 8 million in a challenging operating environment where industry subscriber numbers fell by half a million to 42.5 million by the end of the third quarter.

Gross profit for the quarter came in at SAR 1.7 billion with gross margins touching 85 percent on the back of an estimate SAR 300 million reversal in commercial fees.

Riyad Capital maintained a “buy” rating on the stock, revising its target price higher to SAR 11.50.

“We revise our forecasts upwards to take into account clarifications after the analysts call regarding reversal in commercial fees, amongst others, but we have still not factored in the tower sale impact or capital restructuring, which is expected during the course of 2019,” the report added.