Monday, 6 February 2012 at 12:17, Reuters
Riyad Capital raised its 2012 revenue estimate for Mobily by 13 per cent to 22.67 billion riyals. (AFP)
Etihad Etisalat Co (Mobily) is set to deliver another year of double-digit revenue growth following strong performance last year on improved post-paid sales, Riyad Capital said and raised its price target on the stock by 12 riyals to 74 riyals.
The carrier, an affiliate of UAE's Etisalat, reported a 16 per cent rise in fourth-quarter profit on January 18 helped by a rise in its data revenue and post-paid mobile subscriber.
The Saudi Arabian telecom company had also proposed a larger-than-expected dividend of 2 riyals per share for the second half of the year.
"We believe rising free cashflows and declining debt burden has cushioned Mobily to distribute more cash to shareholders," said Riyad, which kept its "buy" rating on the stock.
Still, rising dividends will not compromise planned capital expenditures, and the telecom operator will have ample cash to pursue strategic acquisitions should such opportunities arise, Riyad wrote in a note dated February 5.
The brokerage raised its 2012 revenue estimate for Mobily by 13 per cent to 22.67 billion riyals, but lowered its gross margin outlook for the company to 51.1 per cent from 55.8 per cent on higher hardware contribution.
"We estimate each per centage increase in hardware contribution to total sales shaves 48 basis points off gross margins," Riyad said.
Mobily shares closed at 58.25 riyals on Sunday. They have risen 8 per cent since it reported fourth-quarter results on January 18.
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