The Buying Craze for Saudi Telecom Stocks Has Analysts Frowning - Bloomberg:
Two Saudi Arabian telecom stocks have delivered the best returns in the nation’s equity market this year in a rally spurred by retail investors hoping for dividends. Most analysts see the gain as unsustainable.
Mobile Telecommunications Co., or Zain KSA, and Etihad Etisalat Co. advanced over 40% this year, almost three times the advance of the main Saudi index. Analysts surveyed by Bloomberg are skeptical and have an average target price for them at about a 10% and 20% discount from their current values respectively.
Etihad Etisalat, known as Mobily, climbed in 2019 after posting a smaller-than-expected loss for last year and an unexpected first-quarter profit. The company has to find a balance between dividends and repaying debt, according to its Chief Financial Officer Kais Ben Hamida, after the company halted payouts in 2014.
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