Earnings Report /
Saudi Arabia

Mobily: Q3 22 Results Analysis | Strong revenue growth continues

  • Revenues increased 6.2% yoy (-1.8% qoq) to reach SAR3.8bn, and came in-line with our estimates.

  • Gross profit came-in at SAR2.3bn, up 5.2% yoy (-1.4% qoq) and was in-line with our estimates.

  • EBITDA stood at SAR1.49bn in Q3 22, up 7.1% yoy (+0.3% qoq) and was marginally lower than our estimates of SAR1.52bn.

SNB Capital
24 October 2022
Published bySNB Capital

Mobily reported a better than expected set of Q3 22 results with net income increasing by 32.7% yoy (+3.8% qoq) to SAR373mn. This is higher than the SNB Capital and consensus estimates of SAR333mn and SAR358mn, respectively. Revenues increased 6.2% yoy (-1.8% qoq) in-line with our estimates, mainly driven by growth in all business segments, FTTH and overall subscribers base. The positive variance in earnings is mainly attributed to 1) lower depreciation and impairment expenses which stood at SAR953mn vs SAR1,050mn in Q3 21 and our estimates of SAR 1,018mn and 2) lower non-opex led by lower than expected finance costs and zakat expenses.

  • Revenues increased 6.2% yoy (-1.8% qoq) to reach SAR3.8bn, and came in-line with our estimates. The yoy growth was driven by an increase in revenue streams, with a healthy growth in FTTH and overall subscribers base.

  • Gross profit came-in at SAR2.3bn, up 5.2% yoy (-1.4% qoq) and was in-line with our estimates. Gross margin contracted by 54bps yoy to 60.1%, lower than our estimate of 60.7%. We believe the contraction and variance in margins was mainly driven by higher share of enterprise solution business, which usually have lower margins.

  • EBITDA stood at SAR1.49bn in Q3 22, up 7.1% yoy (+0.3% qoq) and was marginally lower than our estimates of SAR1.52bn. EBITDA margin stood at 38.8% vs 38.5% in Q3 21 and our estimates of 40.2%. SG&A came-in at SAR813mn (21.2% of sales), higher than our estimates of SAR778mn (20.5% of sales). Depreciation stood at SAR953mn, lower than our estimates of SAR963mn and partially offsets the impact of higher opex on earnings.

  • Finance charges increased by 19.7% yoy (+4.9% qoq) to SAR143mn and came lower than our estimates of SAR155mn. Zakat expenses were SAR21mn in Q3 22 compared to our estimate of SAR25mn.

  • In Q3 22, total capex decreased 13.9% yoy (+24.1% qoq) to SAR396mn, which reflects a capex-to-sales ratio of 10.3%, lower than 12.0% in Q3 21. 

Outlook

Based on our latest update published in March 2022, we are Neutral on Mobily with a PT of SAR42.0. Growth in revenue and subscribers base are the key positives of the result while higher opex is the main concern. We believe the progress in the Etisalat offer is a key stock driver in the short-term. The stock is trading at 2023f P/E of 20.8x vs the peer group average of 21.4x.