Communications

Report by AlphaMena

Over the last couple of years, Etisalat has seen its share price erase nearly all the gains made following an impressive surge in 2021, but does the sell-off provide an opportunity for investors? AlphaMena doesn’t think so. Global inflationary pressures with double-digit inflation rates in Egypt and Pakistan are hampering the group’s revenue and margins. Peer valuation methods are also still bearish. The stock trades at 7.4x 2024 EV/EBITDA and 16.6x P/E (vs. 5.9x and 13.2x for its MENA peers). AlphaMena prefers to bet on more attractive telecom operators, which offer higher dividend yields (Zain, Vodafone Qatar and STC), especially in times of uncertainty.

Communications

Report by AlphaMena

Amid a still-challenging macroeconomic context, STC continues to show strong resilience. The group recorded its highest semi-annual revenues ever in 1H23 at SAR36.506bn (+8.2%). The bottom line also appreciated by 4.2% at SAR6.117bn. STC preserves a generous dividend policy with an attractive regular dividend and high payout ratio which reflects the group’s sound financial position and solid cash flow. STC is a quality stock with a robust business model backed by the company’s leading position in Saudi Arabia, its solid fundamentals and steady investment programme. The group’s recent external growth strategy (e.g., the 9.9% stake acquisition in Telefonica) also provides a positive outlook and will improve shareholder returns in the long run.