Two Saudi telcos stocks surge, Abu Dhabi’s Eshraq rebounds

DUBAI / Reuters

Two Saudi Arabian telecommunications stocks surged on Monday on hopes that troubled operators have finally turned the corner, while Abu Dhabi real estate firm Eshraq was helped by a plan to tie up with state fund Mubadala.
The Saudi stock index edged up 0.1 percent as Zain Saudi jumped 8.9 percent and Etihad Etisalat (Mobily) added 3.6 percent. Last week Zain reported its first-ever quarterly net profit, and this raised hopes for Mobily, which has also been struggling to make money.
“I believe the market is expecting Mobily to report profits just like Zain did,” said Iyad Ghulam, senior equity analyst at NCB Capital. “But I don’t expect the company to be able to report strong growth in sales as Zain did, and costs may remain relatively high,” Ghulam added. NCB Capital has forecast Mobily will post a small loss of 50 million riyals ($13.3 million) for the three months to March 31.
Saudi banks started strongly but then came well off their highs. Mid-sized Bank Aljazira, which jumped as much as 2.6 percent early in the day after its first-quarter earnings beat expectations, closed 0.9 percent lower.
Aljazira made a net profit of 216 million riyals; NCB Capital had expected 184 million riyals and EFG Hermes, 165 million riyals. Profit plunged 43.3 percent from a year earlier, but the bank said this was because of a 209 million riyal special gain from a land sale in the year-earlier period.
Shares in bigger banks Al Rajhi and Riyad Bank traded higher early in the day but closed flat. Al Rajhi, which reported quarterly earnings in line with forecasts, had dropped 2.3 percent on Sunday. Riyad Bank’s first quarter net profit fell 10.8 percent to 1.05 billion riyals but was ahead of the average analyst forecast of 876.5 million riyals.
In Abu Dhabi, Eshraq Properties, whose shares came under pressure last week on news that the emirate’s property prices were softening, rebounded 1.8 percent after Abu Dhabi government fund Mubadala said it was considering forming a venture with the loss-making real estate developer. This would involve developing land in Abu Dhabi owned by Mubadala on Al Maryah Island, where a new financial free zone is located, and by Eshraq on Al Reem Island.
First Abu Dhabi Bank, the United Arab Emirates’ largest lender, added 2.8 percent; the stock is up 7.8 percent since the bank was formed in a merger on April 1. The Abu Dhabi index was the region’s best performer on Monday, adding 1.2 percent.
In Dubai, loss-making builder Arabtec rose 3.2 percent, pulling away from a six-year low after Arabtec hired a new chief financial officer, Peter Pollard, who will oversee its recapitalisation programme. At a shareholder meeting on Tuesday, Arabtec will seek investor approval for a 1.5 billion dirham ($408 million) rights issue.