Shares in Saudi Arabia's second largest mobile operator, Mobily, climbed as its first quarter results signalled further potential growth for the stock.
Profits for Saudi Arabia's Mobily up 40 per cent
The latest earnings from Saudi Arabia's Mobily reinforced analysts' bullish take on the Middle East's telecommunications industry, which is still regarded as having huge growth potential.
The kingdom's second-largest mobile operator reported a first-quarter net profit of 998 million Saudi riyals in the three months to the end of last month, up 40 per cent from 714m riyals in the same period last year, it said.
The company's shares have gained almost 23 per cent since hitting a 15-month low last month and yesterday the stock closed up 0.5 per cent to 52.75 riyals on the Saudi Tadawul All-Share Index.
With 20 "buys", just one "hold" and no "sells", analysts are still backing the stock.
Analysts at Al Mal Capital said Mobily "is our top growth pick in our GCC telecoms universe".
"It has the strongest position in the fastest-growing segment of the largest GCC telecoms market," the brokerage firm said in a note to clients yesterday.
Al Mal kept its "outperform" view on the stock with a price target of 67.68 riyals.
Mobily broke Saudi Telecom's GSM mobile operator monopoly when it was established in 2004 by Etisalat, the UAE's telecoms giant and Mobily's largest shareholder.
It attracted 3.8 million subscribers in its first year of operation, growing to more than 17 million subscribers by last year.
NCB Capital, based in Riyadh, was also optimistic on Mobily's "impressive top and bottom-line growth".
"We had been expecting strong growth, but largely through margin expansion; this was indeed the case, but also combined with better than expected top-line growth," said NCB Capital, whose analysts have an "overweight" rating and a target price of 66.9 riyals per share.
The company expects its data revenue to exceed 20 per cent of total revenue this year, up from 18 per cent last year and 14 per cent in 2009.