1. BUY PT: BHD0.225
MODERATE RISK ETR: +53%
Stock Performance (ZAINBH)
Stock Details
Last price (BHD) 0.15
52‐W High (BHD) 0.18
52‐W Low (BHD) 0.15
Mubasher Ticker ZAINBH.BSE
Bloomberg Ticker ZAINBH:BI
No. of Shares (mn) 368
Mkt Cap (BHDmn) 54.1
Mkt Cap (USDmn) 143
Free Float (%) 20.6
Company Profile
Zain Bahrain is a leading telecommunica뛕ons
operator in Bahrain, offering state‐of‐the‐art mobile
and fixed telecommunica뛕ons services for
consumer and corporate customers. Zain Bahrain
was awarded a mobile telecommunica뛕ons license
by the TRA on 22 April 2003, and other
telecommunica뛕ons licenses later in the same year
and in the following years. The company launched
commercial opera뛕ons on 28 December 2003. The
company owns and operates an advanced network
infrastructure providing higher salience and service
availability, with 2G, 3G, and 4G LTE services,
providing data speeds of up to 100 Mbps HD Voice,
and excellent network coverage, among other
features. The telecommunica뛕ons licenses the
company holds include mobile, internet (ISP),
interna뛕onal, value added, and Na뛕onal Fixed
Wireless services, and accompanying frequency
licenses. The company has strategic partnerships
with global brands of devices and services
providers, and with Vodafone.
Earnings declined by 10% on lowest revenues since IPO: Zain Bahrain
(ZAINBH.BB) released its Q1 2016 results, repor뛕ng a 10% YoY decline
in net earnings to reach BHD0.9mn, missing MTRe of BHD1.1mn by
13%. The lower earnings was mainly due to 9% YoY drop in revenues to
BHD16.1mn (‐9% vs. MTRe), which is considered the lowest quarterly
revenues since the company's IPO in September 2014. However, data
usage through its 4G Long‐Term Evolu뛕on (LTE) network surged by
121% YoY. Amid the strong compe뛕뛕on in the Bahraini market, the
company's subs increased by 3% YoY to exceed 807,000. However, the
subs growth came on the expense of 10% YoY lower es뛕mated monthly
ARPU to BHD6.7 compared to BHD7.5 in Q1 2015 (based on our
calcula뛕on) on the back of con뛕nuous promo뛕ons and bundles.
Meanwhile, EBITDA came in 11% lower (‐11% vs. MTRe), implying
almost a lower margin of 38.3% compared to 39.4% in Q1 2015.
Focusing on data services through the deployment of TD LTE
technology: Zain Bahrain is capitalizing on the upcoming deployment of
TD (Time‐division) LTE technology (the next genera뛕on of LTE) to
maintain technology leadership in the market. The company is focusing
on high profitable data services segment due to the rising demand for
data services with high penetra뛕on of smartphones. Thus, the company
is offering smart packages and bundles through partnership with
Samsung.
BUY maintained on a posi뛕ve long‐term outlook: The lower‐than‐
expected results in Q1 2016 might nega뛕vely affect the price
performance on the short‐term horizon. However, on the long‐term
outlook, we s뛕ll have a posi뛕ve view on Zain Bahrain, mainly supported
by Bahrain's high economic growth, rela뛕vely young popula뛕on, the
company's strong data usage growth and stable market share.
Nonetheless, the country's small popula뛕on size, market satura뛕on,
and compe뛕뛕on are the key risks. Un뛕l we have a more clear vision on
the company's performance in 2016, we maintain our BUY/MODERATE
RISK ra뛕ng and Price Target (PT) of BHD0.225 (+53% expected total
return).
Zain Bahrain
Q1 2016 Results Comment
Telecommunica뛕on Services | Bahrain
Sunday, 24 April 2016
Results miss es뛕mates despite strong data usage growth — BUY maintained
