JEDDAH, 3 December 2003 — Saudi Telecom shares are undervalued, a new report says.
The report, published by BMG Financial Advisors after STC released its third-quarter results, suggests the real value of STC shares to be SR441 per share rather than the SR412 it is selling for in the market.
The report said BMG upgraded STC from a “Reduce” to an “Add” for investors.
Basil M. Al-Ghalayini, president of BMG, told Arab News STC had proved to be the most liquid stock in the Saudi stock market, generating 20 percent of the market turnover since the beginning of the year and representing 21.4 percent of market capitalization.
“With the tremendous growth STC is currently witnessing, BMG revised its forecast to incorporate the better-than-expected third-quarter results,” he said.
Due to the tremendous growth in landline and wireless operations here in the Kingdom, STC’s net income is expected to reach SR8,640 million for the full financial year.
Analyzing STC’s landline and wireless operations, BMG arrived at a target price per share of SR447.51, 91 percent higher than the current market price.
“For the comparison-based valuation BMG used two peer groups — European operators and MENA (Middle East and North Africa) operators — and arrived at a fair value per share of SR433.79, 5.8 percent higher than the current market price. By taking an average of the two fair values, we reached a target value per share of SR440.65,” according to Amr Sultan, a financial analyst with BMG.
