Al Mal Capital Rates Etisalat ‘Outperform’, du ‘Market Perform’

18/06/2009 00:00 AST

Al Mal Capital has kept its “outperform” rating on Emirates Telecommunications Corp., and also maintained its “market perform” rating on Etisalat’s rival, Emirates Integrated Telecommunications Company or du.

“We do not expect population easing in the UAE to be reflected in declining subscriber numbers for the second quarter due to the 90-day active rule,” Al Mal said in a note to clients.

The brokerage said it is projecting Etisalat’s net profit in the second quarter to grow by 9.9 per cent to Dh2.39 billion or Dh0.33 per share from Dh2.2 billion in the first quarter or Dh0.30 per share. But Etisalat’s net profit in the second quarter is seen plunging by 20 per cent compared to profits of Dh2.99 billion or Dh0.40 per share during the same period of 2008.

Al Mal said it is expecting Etisalat’s second quarter revenue to grow 4 per cent from the first quarter, and by 16.7 per cent during the same period last year.

“The fall in net income on a year-on-year basis is due to the second quarter 2008 net income benefitting from a one-off capital gain related to Etisalat reducing its stake in Mobily in Saudi. This boosted second quarter 2008 profits by Dh1.78 billion. Excluding this capital gain, we project underlying net profits increasing by 13.8 per cent in the second quarter of 2009.”

The target price for Etisasat is Dh17.11. The company whose shares are listed at the Abu Dhabi Securities Exchange, closed flat at Dh10.50 on Wednesday.

Al Mal said it expected du to make a net profit of Dh45.6 million in the second quarter, a turnaround from its loss of Dh43.9 million a year ago, backed by a 5 per cent growth in mobile subscribers, as well as a projected fixed line revenue growth of 43.6 per cent Du’s target price was set at Dh3.0. Its shares ended 2.4 per cent lower at Dh2.87 at the Dubai Financial Market.

Khaleej Times