April 24, 2017 / 8:29 AM / 7 months ago

MIDEAST STOCKS-Mobily slump weighs on Saudi shares, Alhokair jumps

DUBAI, April 24 (Reuters) - Saudi Arabia’s second largest telecoms firm, Mobily, slumped on a disappointing set of first quarter results on Monday, as profit-taking hit other shares.

Riyadh’s index slipped 0.3 percent, retreating from a 1.0-percent gain in the previous session on Saturday’s news that the government had reversed the public sector workers’ allowance cut.

Consumer cyclical shares, which were the chief performers on Sunday, fell with home improvement retailer Saudi Hardware Company down 1.9 percent.

Shares of Etihad Etisalat (Mobily) tumbled 7.6 percent to 20.70 riyals after it swung to a net loss of 163 million riyals ($43.47 million) in the first quarter, compared with a net profit of 20 million riyals in the prior-year period and below the average of four analysts’ forecast of a net loss of 69.39 million riyals.

Mobily attributed the net loss to a fall in revenue and higher interest and financial charges because of higher interest rates.

Analysts at NCB Capital said the lower revenue could be blamed on the impact of the authority’s finger print initiative and higher competition.

“The ongoing losses combined with the strong decline in sales are the key concerns. Progress in tower sale MoU with STC will be a key catalyst going forward,” said NCB Capital, which has a “neutral” recommendation on the stock with a price target of 25.00 riyals.

This marks the company’s third consecutive quarterly loss.

Shares in Saudi retailer Fawaz Alhokair, which were suspended on Sunday, surged 10 percent after reporting a net profit of 79.4 million riyals ($21.2 million) in the fourth quarter, significantly higher than 3.17 million riyals made in prior year period and ahead of analysts’ expectation of a net profit of 61.7 million riyals.

The company attributed the improving bottom line to better control of operational costs, though fourth-quarter sales were down 6.3 percent from the prior year period to 1.42 billion riyals.

Analysts at Alrajhi Capital said the improving gross margin, which had been squeezed over the last few quarters, is encouraging and the company may be able to maintain a margin at around 20 percent in the coming quarters.

Alhkair’s 2016 full-year net profit came in at 391.2 million riyals, compared to 615.8 million riyals in 2015. The company’s financial year starts on April 1.

In Qatar, the index fell 0.3 percent, dragged lower by oil-related shares; commodities shipper Qatar Gas Transport lost 2.3 percent.

Dubai’s index, which was shut on Sunday for a public holiday, was down 0.2 percent. Union Properties , which had surged in unusually heavy trade in the prior session, fell 1.9 percent.

In neighbouring emirate Abu Dhabi, the index added 0.1 percent with main support from blue chips. First Abu Dhabi Bank was up 0.5 percent and telecommunications operator Etisalat rose 0.3 percent. (Reporting by Celine Aswad; Editing by Andrew Heavens)

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