JEDDAH: The Jeddah-based BMG Financial Advisors set a target value per share of SR70.74 compared to the current market price of SR55.25 for Etihad Etisalat (Mobily) shares and gave a “buy” recommendation. The stock closed yesterday at SR55.
“We still remain positive on the Saudi telecom market, with its strong macroeconomic factors, including high GDP per capita, rising income levels and its relatively young, fast-growing population, all of which should maintain healthy net subscriber additions,” Basil Al-Ghalayini, the CEO of BMG, said, adding that “we believe that with the entrance of Zain (Mobile Telecommunications Company Saudi Arabia) as the third telecom operator, competition will be stimulated in the Saudi market, resulting in an overall increase in net subscriber additions.”
The BMG said in its research report, which was released yesterday, that Zain, the third mobile entrant in the Saudi market, has announced the launch of its “One Network” that will allow mobile customers to make phone calls and SMS at local rates and receive incoming calls free-of-charge across Bahrain, Iraq, Jordan and Sudan. Zain’s Saudi Arabian operation will join the One Network on commencement of commercial services in the second half of 2008, while other Zain operations in the region will join the service, subject to governmental and regulatory approvals. The report said, Mobily began the first phase of its second 3.5G network expansion, in order to keep abreast of the latest available 3.5G technologies, and expand its network coverage to reach new cities in the Kingdom. Mobily had already allocated almost SR1 billion for this expansion. Since mid-2006, Mobily has established its 3G network, attracting more than 2 million subscribers in different 3G services.
In March, Mobily’s founding shareholders, including Etisalat, sold 100 million shares, which is equivalent to 20 percent of the company’s total outstanding shares, in a secondary offering to a group of strategic Saudi investors.
Mobily was also obligated to increase its public float to 40 percent during the third year of its operational lifetime. As a result of this sale, Etisalat’s stake decreased from 35.5 percent to 26.25 percent. The shares were sold at SR55 per share, based on an average trading price, resulting in a total transaction value of SR2.41 billion.
“Etisalat will try to increase its stake in Mobily by buying through the open market, since we believe that the selling price undervalued the potential of Mobily, as it was significantly lower than our fair target value for Mobily of SR88.73 per share, which we set in January,” Al-Ghalayini said. Mobily has already announced its plans for a capital increase by 40 percent to SR7 billion, through the issuance of 200 million new shares. The capital increase will take place with a ratio of 4 new shares for every 10 shares owned by a shareholder of Etihad Etisalat.
The Saudi stock market, however, fell slightly yesterday. The Tadawul All-share Index (TASI) dropped 12.08 points to 9,789.91. Over SR7.96 billion worth of shares changed hands yesterday.
Rashid Abdul Aziz Al-Rashid, chairman of Riyad Bank, announced yesterday that the bank’s board of directors had decided to distribute SR1.05 billion or 70 halalas per share among its shareholders as dividends for the first half of this year. Shareholders registered with Tadawul records by the end of Monday, June 30, would be entitled for the dividends. He said the bank would start distributing the dividends on July 15. Riyad Bank shares, however, fell slightly to close at SR34.75.
In another development, the Capital Market Authority (CMA) gave approval yesterday for NCB Capital Company to offer “AL-Ahli Saudi Mid Cap Equity Fund” and “Al-Ahli Global Technology Fund” and for Arab National Investment Company to offer “Al-Mubarak Growth Fund” and “Al-Mubarak Conservative Fund.”
BMG Index falls
The BMG Saudi Index could not maintain its positive performance seen over the past two days, and declined yesterday by 0.4 percent to 545.4 points. The market turnover, however, continued to go down, dropping by a strong 22.1 percent to SR3.4 billion ($914 million) versus SR4.4 billion ($1.2 billion), registered in Sunday’s session. Nine shares ended the session on a positive note, whereas five stood still. Malath Cooperative Insurance and Reinsurance Company reversed its performance to become yesterday’s worst performer, from being the best performer on the day before.
Its share price depreciated by 4.14 percent to close at SR81 per share. The best performance, on the other hand, was registered by Savola Group, appreciating by 2.7 percent to SR38.
Saudi Basic Industries Corp. (SABIC’s) shares closed at SR150.
