Mobily: A Smart Investment in Saudi Arabia’s Thriving Telecom Industry

• Market Capitalization - ‪‪42.2 B‬ SAR
• Relative Strength

The chart highlights Etihad Etisalat's strong performance, with a 15% annual return that outshines the Tadawul all-share index.

Technical Analysis

• The chart indicates a clear uptrend in the stock price.
• Notably, over the past year, the stock has experienced a prolonged consolidation phase, forming a distinct Ascending Triangle pattern.
• A breakout from this pattern is anticipated, likely driving the price higher and extending its upward trajectory.

Revenue & Profit Analysis

• Year-on-year
  • In Q3 FY24, sales totaled 17,815 million SAR (LTM), marking a 7% increase from 16,636 million SAR (LTM) in the same period last year.
  • EBITDA for Q3 FY24 rose to 6,420 million SAR (LTM), a slight increase from 6,392 million SAR (LTM) in Q3 FY23.
  • The EBITDA margin experienced a minor decline, recorded at 36% (LTM) in Q3 FY24, down from 38.4% in Q3 FY23 (LTM).
• Quarter-on-quarter
  • On a quarterly basis, sales for Q3 amounted to 4,498 million SAR, a rise from 4,465 million SAR in Q2.
  • EBITDA for Q3 saw a substantial increase, reaching 2,148 million SAR, compared to 1,348 million SAR in Q2.
  • The diluted EPS for Q3 was reported at 3.73 SAR (LTM), an increase from 3.34 SAR (LTM) in Q2 2024.

Valuation

• P/E Ratio
  • This stock presents an appealing valuation, with a Price-To-Earnings Ratio of 15.x, slightly higher than the peer average of 13.8x.

• P/B Ratio
  • The stock's Price-To-Book ratio is 2.4x, indicating it may be overvalued compared to the peer average of 1.5x. However, a P/B ratio below 3x is typically considered a reasonable valuation.
• PEG Ratio
  • The PEG ratio of 0.40 indicates that the stock is undervalued in relation to its anticipated earnings growth.
• Cash Flow Analysis
  • As per Q3 FY24, cash flow from operations declined slightly by 6% to 5,600 million SAR (LTM), down from 5,946 million SAR (LTM) in Q3 FY23.

Debt Analysis

• As of Q3 FY24, Etisalat’s total debt stands at 6,310 million SAR, leading to a debt-to-equity ratio of 0.35. This marks a significant improvement, as the ratio has decreased from 0.89 over the last five years.

Top Shareholders

• Blackrock has a significant ownership stake of 2.71% in this company, while The Vanguard Group holds a 1.33% interest.

Conclusion

Saudi Arabia's telecommunications sector is poised for significant growth in the coming years, driven by the government's Vision 2030 initiative. This ambitious plan includes substantial investments in telecommunications infrastructure, particularly in building a national fiber optic network and expanding 5G services.

As a leading telecommunications provider, Etihad Etisalat (Mobily) is strategically positioned to capitalize on this momentum., supported by its strong financial performance and positive technical aspects.