Mobily, the second-largest communications company in Saudi Arabia, has posted a third-quarter (Q3) net profit of SR524 million ($140 million) and a 12.8% net margin, according to Al Rajhi Capital Research.

 

“Overall, net profit beat our expectations by 5%. Our estimate for net profit and margin was SR499 million and 12.0%, respectively,” Al Rajhi said.

 

The firm continued the topline growth, supported mainly by higher sales from the business segment, while the consumer segment growth was flat.

 

Sales growth

Sales growth came at 7.1% y-o-y, lower than the previous quarter which witnessed higher growth in the consumer segment due to seasonal factors and Haj season. 

 

At the gross profit level, the company grew its gross profit by 2.7% y-o-y, lower than the sales growth, likely due to lower margins from the business segment. 

 

Operating cost

However, Mobily managed to lower operating cost by SR92 million y-o-y from 21.0% of sales to 17.4% in the current quarter. Operating profit came in at SR689 million, translating to 31.2% y-o-y growth and a 16.8% EBIT margin. Mobily continued its deleveraging plan and paid down SR543 million during the third quarter, bringing the overall finance expense to SR162 million vs SR176 million in 2Q23.

 

“As such, we revise our target price from SR46/share to SR53/share and maintain overweight while the current market price is SR44.75/share, implying an upside of 18.3%,” Al Rajhi said.--TradeArabia News Service