Earnings Report /
Saudi Arabia

Mobily: Stable results as operational efficiency continues

  • Revenues increased by 0.1% yoy (2.0% qoq) to SAR3.6bn and were marginally higher than our estimates of SAR3.5bn

  • Gross profit increased by 0.3% yoy (5.2% qoq) to SAR2.1bn and was largely in line with our estimates of SAR2.0bn

  • Financial charges came-in at SAR126mn down 16.8% yoy (1% qoq), and was higher than our estimates of SAR67mn

Iyad Khalid Ghulam
Iyad Khalid Ghulam

Head of Equity Research

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Khaled Alderyaibi
Khaled Alderyaibi

Senior Equity Research Analayst

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SNB Capital
20 April 2021
Published bySNB Capital

Mobily reported a strong earnings growth of 73.8% yoy (-8.1% qoq) to SAR226mn in Q1 21. However, it was lower than the NCBC and consensus estimates of SAR250mn and SAR253mn, respectively. Although revenues of SAR3.6bn were slightly higher than our estimates, the deviation is primarily on account of higher than expected financial and other expenses.

Revenues increased by 0.1% yoy (2.0% qoq) to SAR3.6bn and were marginally higher than our estimates of SAR3.5bn

The increase is mainly attributable to the growth in business unit revenues and FTTH active base, which more than offset the impact of COVID-19 restriction on some of the company’s other services like international roaming.

Gross profit increased by 0.3% yoy (5.2% qoq) to SAR2.1bn and was largely in line with our estimates of SAR2.0bn

Gross margin came-in at 57.5%, lower than our estimates of 58.1%, but was higher than Q4 20 and Q1 20 levels of 55.7%, and 57.4%, respectively.

EBITDA stood at SAR1.4bn and was in-line with our estimates of SAR1.3bn

EBITDA margin came-in at 37.9% vs our estimates of 38.2%. SG&A stood at SAR707mn in Q1 21 vs SAR780mn in Q1 20, down 9.4% yoy. The increase in EBITDA is due to various efficiency measures. Depreciation expenses came-in SAR996mn, largely in-line with our estimates of SAR981mn.

Financial charges came in at SAR126mn down 16.8% yoy (1% qoq)

It was higher than our estimates of SAR67mn. Zakat expense came-in at SAR18mn vs our estimates of SAR27.7mn.

Capex in Q1 21 decreased to SAR155mn vs SAR1.0bn in Q4 2020

Operational Cash Flow (EBITDA-CAPEX) stood at SAR1.2bn vs operational cash flow of SAR844mn in Q1 20, up 43.4% yoy.

Any progress in Towers Company deal will be a key stock catalyst

In March 2021, CITC approved in principle the request submitted by Zain KSA, Mobily, Raidah Investment Company and IHS KSA to form a consortium to acquire the telecom towers owned by Mobily and Zain KSA, and to merge and unify these towers under the “Towers Company” in Saudi. We believe the deal is still in early stages but any progress will be a key stock catalyst going forward.

We are Neutral on Mobily with a PT of SAR29.7

The stock is trading at 2021f EV/EBITDA of 6.2x, higher than the peer group average of 5.9x.