Rajhi Capital - Etihad Etisalat Company (16-Jan-14)
3
Etihad Etisalat Company Telecom – Industrial EEC AB: Saudi Arabia 16 January 2014 US$17.66bn 55% US$17.79mn Market cap Free float Avg. daily volume Disclosures Please refer to the important disclosures at the back of this report. Powered by EFA Platform 1 Target price99.5015.7% over current Consensus price 84. 50 -1.7%over current Curr ent pri ce 86.00 as at 14/1/2014 Underweight Neutral Overweight Flash view Flash View is an analyst’s prelimin ary interpretation of a results announcement or the impact of a major event. Our investment rating and earnings estimates are not being changed in this report. Any formal changes to our investment rating or earnings estimates will be made in a subsequent report, which may differ from the preliminary views expressed here. Performance Earnings Period End (SAR) 12/12E 12/13E 12/14E 12/15E Revenue (mn) 23,384 25,771 27,568 28,699 Revenue Growth 16.6% 10.2% 7.0% 4.1% EBI TDA (mn) 8,447 9,342 9,957 10,705 EBI TDA Growth 13.3% 10.6% 6.6% 7.5% EPS 8.43 9.03 9.71 10.22 EPS Growth 16.1% 7.1% 7.6% 5.2% Source: Company data, Al Rajhi Capital Valuation 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 01/10 01/11 01/12 01/13 EV/Sales (x) Source: Company data, Al Rajhi Capital Research Department ARC Resear ch Team Tel 966 11 211 9332, go pij@alrajhi-capital .comMobily Beats estimates Mobily continued to post strong earnings growth , as the compan y’s Q4 earnings beat our as well as consensus estimates. The operator’s revenue grew by 6.6% y-o-y to SAR7.2bn, while the net profit improved 8.6% y-o-y to SAR2bn. The growth was le d by the business sector and increase in data consump tion, which is in line with the company’s focus on the corporate and data segments. We will revisit our estimates once the detailed financials are published. We currently h ave an Overweight ratin g on Mobily with a target price of SAR99 .5 per share, wh ich provides a p otential upside of 15.7% from the current market price. •Revenues: Mobily’s Q4 revenue came in at SAR7,204mn (+6.6% y-o-y), beating our estimate of SAR6,87 3mn by 4 .8%, and co nsensus estimate of SAR6,872mn. The top line growth was driven by corporate and data segments. For the full year, revenue rose by 6.8% y-o-y to SAR25.2bn. Revenue from the business sector increased 23% y-o-y in 2013, led by a sharp rise in revenue from ho sting and managed services. The business sector revenue accounted for about 8% of Mobily’s total revenue in 2013. •Gross and operating profit: Gross profit jumped 13.5% y-o-y to SAR3,932mn, as gross profit margin improved by about 330bps. The company’s operating profit rose by a moderate 5.6% y-o-y to SAR1,992mn , beating our estimate of SAR1 ,914mn b y about 4%. Operating profit marg in contracted by about 30bps y-o-y to 27.7%, while we had expected the margin to remain flat. •Net profit: Mobily’s Q4 2013 net profit of SAR2,039mn (up 8.6% y-o-y ) beat our SA R1,861mn es timate by 9. 5%, and consen sus estimate o f SAR1,824mn. Net profit margin expanded by about 5 0bps to 28.3% against our estimate of 27.1%. This may be due to either a higher other income or lower zakat expense. For the full year 2013, the bottom line is up about 11% y-o-y to SA R6,677mn, translating in to an EPS o f SAR8.67. Figure 1 Mobily: Summary of Q4 2013 results (SAR mn) Q4 2012 Q3 2013 Q4 2013 % chg y-o-y % chg q-o-q ARC est Revenue 6,755 6,433 7,204 6.6% 12.0% 6,873 EBI TDA 2,541 2,426 Not disclosed n.a. n.a. 2,591 EBI TDA margin (%) 37.6% 37.7% n.a. n.a. n.a. 37.7% Operating profit 1,887 1,730 1,992 5.6% 15.1% 1,914.6 Net profi t 1,878 1,687 2,039 8 .6% 20.9% 1,861 Source: Company data, Al Rajhi Capital Earnings vs our forecastAbo ve In Line Below Likely impact: Earnings estimates Up No Change Down Dividend estimates Up No Change Down Recommendation Upgrade No Change Downgrade Long term view Stronger Confirmed Weaker 94 104 114 67 77 87 PriceClose MAV10 MAV50 Relative to TADAWUL FF (RHS) -10 30 70 R S I 1 0 1 2 3 01/13 04/13 07/13 10/13 V o l m n Existing rating
Rajhi Capital - Etihad Etisalat Company (16-Jan-14)
