STC to Perform well, with Profits -Al Jazira Capital Forecast

The Saudi Telecom Company (STC) performance is set to continue growing, thanks to its dominant position in the Saudi market and vast customer base, according to Al Jazira Capital.

STC has maintained its leading position by investing continuously in technologies, with the expectation of achieving positive long-term results, and the company’s strong financial position will support its business expansion.

The company’s profits would increase by 4.2% to SR11.46 billion by the end of the year, up from SR10.99 billion in 2020, and to SR12.2 billion in 2022, with growth continuing the following year to SR12.9 billion, Al-Jazira Capital predicted.

Given the growing positions of STC shares at a target price of SR130, Al-Jazira Capital advised expected exceptional dividends, in 2021, as they were, in 2020, despite the company’s excellent cash flows, which have improved significantly, from SR9 billion, in December 2020 to SR14 billion, in September 2021, thanks to SR3.6 billion from Solutions’ initial public offering and SR750 million from the sale of a 15% share in STC Bank. 

Because of the company’s robust balance sheet, the company would be able to continue to explore and invest in promising growth possibilities, in both the domestic and international markets.

Given the company’s large subscriber base and investments in non-traditional businesses, Al-Jazira Capital believes STC is the strongest company in the Saudi telecom market, with a long-term view, and the company is likely to benefit from increased adoption of the 5G network and other advanced technologies.

STC’s profits of SR2.924 billion in the third quarter of this year were in line with predictions, putting them at SR2.923 billion, with revenues rising to SR15.7 billion, up 5.7% from the previous quarter. It came too close to meeting predictions of SR15.9 billion.

It has a dominant position in the enterprise solutions sector, with a market share of 90% in the public sector, and the company’s growth is aided by the ongoing digitalization push in the public and commercial sectors, as part of Kingdom Vision 2030.