AlJazira Cap says stc’s Q1 2021 net profit beats estimates, long-term prospects positive

A branch of stc

stc’s Q1 2021 net profit of SAR 3 billion exceeded AlJazira Capital and consensus estimates’ of SAR 2.6 billion and SAR 2.7 billion, respectively.

Strong growth in revenues is expected during the coming quarters, supported by the strong demand for the company’s services across various segments, as well as solid performance from its subsidiaries, AlJazira Capital said in an earnings review.

The telco is expected to distribute good payouts with a yield of 4% based on Aljazira Capital’s estimates for 2021 financials.

The company is also projected to report a net profit of SAR 11.12 billion in 2021.

The brokerage firm remains positive on the stock due to its bright long-term prospects and potential value unlock through a listing of subsidiary. stc recently announced plan to list wholly owned subsidiary, Arabian Internet and Communications Services Co. (solutions by stc).

Moreover, Aljazira Capital sees opportunities to list other subsidiaries in the future. Hence, shareholders are likely to benefit from the potential unlocking of value by listing of stc’s subsidiaries.

The brokerage maintained its “Overweight” recommendation on the stock, setting the target price at SAR 142.90 per share.