Mobily forecast to remain profitable in the coming quarters, says Falcom

Etihad Etisalat Co. (Mobily) is expected to maintain profit in the coming quarters, Falcom Financial Services said in a note.

“Though the company recorded the fourth straight quarter of net profit, it fell short of consensus estimates. Consistent growth in revenues lifts Mobily’s net income yet misses street expectations,” Falcom added.

The company continues to deploy network modernization and an additional spectrum, along with focusing on positive cash flow generation,” said Falcom.

The telecom operator recorded eight consecutive quarters of revenue growth (+14.4% YoY, 2.2% QoQ) to SAR 3.4 billion in Q3 2019.

Gross profit was up 14.6% YoY and 3.0% QoQ to SAR 2.01 billion, as the steady rise in revenues compensated for the impact of the new government royalty program that was announced previously and the implementation of IFRS16.

The company reported a rise in operating profit and EBITDA despite higher selling, marketing, and administrative expenses.

Mobily continued to perform well with consistent growth in revenues, improved operational performance and a strong and healthy EBITDA.

Falcom maintained a “Neutral” outlook on the stock, and revised target price to SAR 22.0