Introduction - Company Overview of Etihad Etisalat (Mobily)

Etihad Etisalat Company, commonly known as Mobily, is a major telecommunications provider in the Kingdom of Saudi Arabia. Founded in 2004, Etihad Etisalat is headquartered in Riyadh, Kingdom of Saudi Arabia. The company builds and runs mobile phone networks and high-speed internet cables. They also sell mobile phones, set up phone systems, and fix telecommunication equipment.

They offer various other services such as information technology, application, billing, and testing support, as well as product marketing, process management, and financial services. The company also engages in telecommunication services, consulting, and office administration. Besides their main business, they invest in shares, bonds, and real estate. Mobily have a market capitalization of 42.2 Billion SAR [as of January 2025].

Technical Analysis - Is it the right time to take this trade?

• 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.

Relative Strength Analysis

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

Fundamental Analysis - How well is the company performing?

1. Revenue & Profit Analysis

A. Year-on-year Performance Analysis

• 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).

B. Quarter-on-quarter Performance Analysis

• 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.

2. Stock Valuation Analysis: Is the Stock Price Right?

A. P/E Ratio (Price-to-Earnings)

• This ratio compares the company's stock price to its earnings per share.
• This stock presents an appealing valuation, with a Price-To-Earnings Ratio of 15x, slightly higher than the peer average of 13.8x.

B. P/B Ratio (Price-to-Book)

• This ratio compares the company's stock price to its book value.
• 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.

C. PEG Ratio (Price to Earnings to Growth)

• This ratio looks at the P/E ratio while also considering the company's expected earnings growth.
• The PEG ratio of 0.40 indicates that the stock is undervalued in relation to its anticipated earnings growth.

3. 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.

4. 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.

5. Major Shareholders and Institutional Interest

• 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.

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

Looking to start your investment journey? Subscribe now to get exclusive access to our Premium Stock Trading Advice for Saudi Tadawul and take a step toward building long-term wealth.