In its weekly report, Al Rajhi Capital Research, which provides reports and analyses of Saudi Arabian economy, outlined the second quarter performances of some of the leading companies in the Kingdom. STC Saudi Telecom Company (STC), the largest telecommunications company in the Kingdom, reported a Q2 net profit of SR1.87 billion, said Al Rajhi Capital report. The report said the net profit was below its expectation of SR2.23 billion and consensus SR2.40 billion estimates. Despite lower than expected net profit, the report said that that the overall results are positive as STC's revenue saw an increase of 11 percent and 3 percent gross profit which are higher than expectations. Moreover, excluding losses from associates (non-cash item of SR0.3 billion), which has been historically volatile, net profit was mostly in line with the Al Rajhi's estimate. Overall, the key metric, EBITDA was in-line as well helping the company maintain its dividend per share at SR1 (in-line). The company continues to be the key beneficiary of fixed line broadband growth in the Kingdom. Mobily Meanwhile, Mobily, another telecom service provider in the Kingdom, reported Q2 2016 net profit of SR18.8 million, broadly in line with Al Rajhi Capital Research's SR23 million estimate and below consensus estimate of SR50 million, mainly driven by cost optimization benefits, which were partially offset by rising interest costs. Gross profit expanded on the back of on-going cost optimization initiatives and lower sale of hand sets. Al Rajhi Capital believes that margin improvement would be the key focus for the company given the matured state of the sector. Pressure from implementation of biometric verification system and increasing interest cost could continue to impact performance. After previously reporting two consecutive quarterly profits, Q2 results reaffirm the new profit normal for the company at around SR15-20 million. Mouwasat Medical Services Co. According to Al Rajhi Capital Research report, Mouwasat Medical Services Co. reported Q2 results in-line with the expectations. Net profit grew 11 percent to SR62.3 million. The company reported a 2.4 percent drop in quarterly revenue, implying SR299 million revenue during the quarter. The 10 percent increase in revenue is attributed to the growth in Mouwasat Riyadh Hospital driven by expansion in sub specialty clinics operations. National Industrialization Co. (Tansee) Tansee positively surprised the market, posting net profit of SR103.9 million for Q2 2016, beating all estimates by a wide margin. Revenues at SR3.8 billion was in-line with our SR3.75 billion forecast. Gross and operating profitability were also largely in-line with the estimates. The surprise at the net level is primarily due to higher than expected other income and lower than expected minority interest charge, the report analyzed. Bahri Bahri's Q2 results were broadly in-line with our estimates. Gross profit at SR573 million is marginally lower than our estimate of SR585 million, indicating the revenue (yet to be disclosed) will be closer to the estimate, said Al Rajhi Capital report. Shaker Shaker's Q2 was impacted by weak demand, with revenue declining 17 percent on the back of lower volume. However, gross margin at 25.5 percent was higher than the estimate of 24.6 percent, suggesting that Shaker likely did not resort to discounts in order to push volumes. Despite cost management efforts which yielded SR8.9 million savings in G&A expenses, operating margin declined 240 bps due to higher investments in sales and distribution. Lower sales volume also impacted the performance of its associate LG Shaker, share of profit from which stood at SR13.7 million.
