For more information you may contact: Turki Fadaak Research & Advisory Manager [email protected] - capital.com Ahmed Hindawy, CFA Senior Financial Analyst [email protected] - capital.com Our website: - capital.com/en/research Recommendation Overweight Fair Value (SAR) 08.92 Price as of Sep 6, 2015 04.22 Expected Return % 1..1 Company Data Tadawul Symbol 7020.SE 52 Week High (SAR) 94.00 52 Week Low (SAR) 21.70 YTD Change - 42.7% 3 - Month Average Volume (Thousand Shares) 4,357 Market Cap. (SAR Million) 19,589 Market Cap. (USD Million) 5,224 Outstanding Shares (Million Shares) 770 Major Shareholders ( > 5% ) Emirates Telecommunication Corp. (Etisalat) % 0..24 General Organization for Social Insurance % 11.94 FY - Ending December 2013A 2014A 2015E EV/EBITDA 4.24 14.92 11.90 EV/Sales 1.75 2.39 2.34 P/E 4.18 - - Dividend Yield 18.9% 9.8% 0.0% P/B 0.93 1.18 1.27 Price/sales 1.08 1.40 1.41 Current Ratio 1.07 0.42 0.64 20 40 60 80 100 120 Etihad Etisalat Telecom Index Tadawul Index
September 6, 2015 2 Telecommunication & Information Technology Sector Etihad Etisalat EEC AB - 7020.SE Changes in the financial statements The Financial Statements went through several modifications starting from the third quarter of 2014: The third quarter of 2014 Changing the accounting treatment for sales of handsets and SIM cards. Correcting an error in the timing of recognizing revenues from a promotional program. Changing the previous accounting treatment of revenues from the lease of fiber - optic network which recognized revenues in spite of lack of full readiness of communication ports. The fourth quarter of 2014 (unaudited ) In Q4 2014, Mobily made a deduction of SAR 829 million; for deferred promotion costs and other items; from the recurring telecom revenues. According to the financial statements, the management of Mobily has reassessed the estimated beneficial economic life of incentives given to customers in the fourth quarter and this has accelerated the recognition of deferred promotional costs amounting to SAR 496 million in Q4 2014. Mobily disclosed that one of its FTTH partner failed to submit the bank guarantee within the period stipulated in the contract. According- ly, Mobily booked provisions of SAR 184 million in Q4 2014 against the outstanding accounts receivables from this contract as well as other provisions of SAR 315 million for receivables from the same partner in another arrangement. FY14 Financial Statements (audited - March 2015): Reducing SAR 76 million as a result of changing the estimate for data revenue amortization by SR 42 million, in addition to SR 34 million resulting from difference of the consolidation of National Company for Business Solutions (NCBS) UAE (a fully owned subsidiary). Increasing COGS by SAR 221 million resulting from deferred cost of customer premises equipment on additional information and revised assessments, in addition to the decrease in cost by SAR 35 million as a result of the difference of the consolidation of NCBS.
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