Palestine Telecommunications (PALTEL)sahem-inv.com/reports/researches/ar/20150225175652.pdf ·...
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Palestine Telecommunications (PALTEL)
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Earnings Report FY2014
February 25, 2015
Sahem Insight
Profitable investments are paying off
Palestine Telecommunications PALTEL– the largest company by market capitalization - posted JD85.07 million net
profits for the full year of 2014; down by 7.36% compared to the corresponding year of 2013. Accordingly, Earnings per
share dropped from JD0.698 in 2013 to JD0.646 in 2014. This performance came following a drop of 5.17% in revenues
and a consequent decline of 14.84% in operating profit. On the other hand, lower part of the income statement for
PALTEL reported relatively balancing elements to the net bottom line figure.
PALTEL has been affected directly by political events in Palestine, especially during the war on the Gaza Strip in the
period of July and August that has resulted in a drop in operating revenues and losses from the damage to the
company’s equipment and infrastructure. According to PALTEL, estimates yielded $32.6 million of total loss including
$10 million as actual damage to fixed and mobile network elements, $14.8 million revenue loss and around $7.8 million
for especial philanthropic campaigns and free minutes for the affected people of Gaza.
Along with the extraordinary losses for 2014, operating indicators for PALTEL showed a total growth of 1.9% in
subscribers base. While on the other hand, investment strategy of the group has been adding up to the income
statement noticeably for the past two years. In the year 2014, investment gains were a balancing factor given the
unexpected drop in revenues resulting from external factors. In this matter, the Group allocated a major investment
portion for recovering the damaged network in order to maintain services that meet subscribers’ expectations.
Moreover, PALTEL’s return to benefit from the tax exemption has significantly added positively to reduce the effect of
the damage losses.
Risk management opposes other unexpected factors
Historically, Palestinian companies endure currency exchange losses given the fact of currency variation in operations
and financial reporting in addition to lack of one national currency. PALTEL is one of the rare companies that are
pursing strategies to control some of the unexpected weakening/strengthening of the US dollars versus the Israeli
Shekel. In this context, PALTEL has signed currency forward contracts with maturities extending H1 2015 in order to
decrease the foreign currency translation risk that is related to its operations.
Q uo tes
PSE: PALTEL
Bloomberg: PALTEL.PS
IS IN : P S5 0 02 1 11 9 51
Sec tor : Serv ices
Trad ing Currency: JOD
K ey Ma rk e t Da ta
Da te : 24 /0 2 /2 0 15
Cl os i ng : JOD5 .83
Y TD: 2 .2 8 %
P E : 9 .0 2x
P /BV : 1 .4 7x
5 2 H ig h / Lo w : 6 .6 5 /5 .3 0
Free Float at 49.70%
M. Cap: JD767,373,750
O. Shares: 131,625,000
IRR: 20.14%
2
Palestine Telecommunications (PALTEL)
Earnings Report FY2014
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Overview
Palestine Telecommunication Company “PalTel” is an
integrated telecom operator offering fixed, mobile, Internet and
data services throughout Palestine. Paltel owns a majority
equity ownership in Paltel (fixed line operator), Jawwal (Mobile
Operator), Reach (Call Centre services), Palmedia (Media
Services Provider), Hulul (Business Solutions Provider) and
Hadara (ISP Services). Paltel also owns equity in Vtel Holdings
a Dubai-based multinational telecommunications company with
interests in Middle East, Asia and Europe.
Paltel Group shares are listed on the Palestine Exchange
Market (PEX) since May 6th, 1997, under the ticker symbol
PALTEL. The issued share capital of Paltel Group consists of
131,625,000 shares with a nominal value of JD 1.00. Paltel
shares became a member of the S&P-AFE 40 of the union of
Arab Exchanges and a member of the Dow Jones-FEAS 50 of
the Euro Asian Exchanges, giving the Paltel Share both
regional and international visibility.
Paltel remains the most active stock on the Palestine Exchange during 2014, constituting 33.20% of the overall market
capitalization of PEX, whereby 79.01% of the services sector. It also constituted 28.24% of the total traded value in Palestine
Exchange (PEX) and 83.76% of the total services sector, 6.47% of the total traded volume of the PEX, while 38.38% of the
services sector, . The Group has enjoyed a reliable and consistent history of dividends payout over the previous years
making it an attractive company for those investors looking at acquiring its stock. The number of shareholders at the end of
2014 reached 7,755
The Group provides fixed line, cellular and data services, making it the most integrated service provider and a provider of
choice for added value services .Across its service lines, the Group operates in a market with a youthful population with 80%
penetration rate for mobile services as end of Q3, 2014; allowing more room for growth and yields.
Sabih Taher Masri- Chairman
Arab Supply & Trading Company - Ammar Aker
GMS Holdings - Ghiath Munir Sukhtian
Cairo Amman Bank - Farouq A. Zuaiter
Arab Bank - Basel Abdel Nabi
Aswaq for Investment Portfolios L.L.C - . Bassem Abd Al-haleem
Palestine Development and Investment - Sharhabil Al-Zaim
Birzeit Pharmaceutical Co. - Talal Nasiruddin
Palestine Development & Investment - Laith Muneeb Rashid Al Masri
Palestine Development & Investment - Samir Othman Halileh
Board of Directors
Company Background
Q uo tes
PSE: PALTEL
Bloomberg: PALTEL.PS
IS IN : P S5 0 02 1 11 9 51
Sec tor : Serv ices
Trad ing Currency: JOD
K ey Ma rk e t Da ta
Da te : 24 /0 2 /2 0 15
Cl os i ng : JOD5 .83
Y TD: 2 .2 8 %
P E : 9 .0 2x
P /BV : 1 .4 7x
5 2 H ig h / Lo w : 6 .6 5 /5 .3 0
Free Float at 49.70%
M. Cap: JD767,373,750
O. Shares: 131,625,000
IRR: 20.14%
3
Palestine Telecommunications (PALTEL)
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Earnings Report FY2014
Major Shareholders
Shareholder as of Sep 30th, 2014 %
PADICO 30.63%
PIF 9.45%
Arab Bank Investments 4.69%
Cairo-Amman Bank 3.93%
Rasmala Investment Bank 2.64%
Subscribers base hit 3.31 million; growth rate of 1.91%
Palestine Telecommunications PALTEL reported a growth of 1.91 % in its total number of subscribers to reach 3.31
million as of December 31, 2014 including fixed line, wireless (Mobile) and data services compared to 3.25 million at
the end of 2013.
Wireless services subscribes - which account for 80.71% of the total figure -, increased by 1.52% to reach 2.67 million
in 2014 compared to 2013. Sustaining the strong performance in the wireless subscribers came amid raising the
competition in the Palestinian Telecommunications sector.
Fixed line subscribers- the second contributor by 12.18%- reached 0.40 million at the end of 2014, with no increase to
the end of 2013.
Data services (ADSL) subscribers - which contributed the least to the total base by 7.10%-, increased 10.33%, standing
at 0.23 million in 2014.
Data servicesFixed lines
Wireless
213,000
403,000
2,630,000
235,000403,000
2,670,000
2013 2014
Q uo tes
PSE: PALTEL
Bloomberg: PALTEL.PS
IS IN : P S5 0 02 1 11 9 51
Sec tor : Serv ices
Trad ing Currency: JOD
K ey Ma rk e t Da ta
Da te : 24 /0 2 /2 0 15
Cl os i ng : JOD5 .83
Y TD: 2 .2 8 %
P E : 9 .0 2x
P /BV : 1 .4 7x
5 2 H ig h / Lo w : 6 .6 5 /5 .3 0
Free Float at 49.70%
M. Cap: JD767,373,750
O. Shares: 131,625,000
IRR: 20.14%
4
Palestine Telecommunications (PALTEL)
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Earnings Report FY2014
Financial performance in 2014
Operating margin down to 28.97%
PALTEL recorded a decrease of 5.17% in its revenues to stand at JD355.87 million in 2014 compared to JD375.26
million in the same period of 2013. The revenues from external customers generated by the data, fixed and media
operating segments have increased by 0.17%, 1.39% and 26% respectively, whereas the revenues generated from
mobile segment have decreased compared to 2013. The average revenues per user ARPU for the wireless mobile
subscribers per month reached JD8.1 in 2014 compared to JD8.8 in the same period of 2013; down by 8.5% affected
by larger customer base, low ARPU of new customers in addition to offering larger discounts to the customers and
exchange rate differentiations.
Moreover, the fixed line ARPU hit JD11.50 in 2014 compared to JD13.40 in the same period of 2013; down by
13.90%. While data services reported an increase of 4.1% in ARPU which reached JD10.5 in 2014 compared to
JD10.1 in the same period of 2013.
Lower Bottom line figure on extraordinary events
Palestine Telecommunications PALTEL – the largest
company by market capitalization- posted JOD 85.07 million
net profits for the financial year of 2014 down by 7.36%
compared to JOD 91.83 million in 2013. Accordingly,
Earnings per share dropped from JD0.698 in 2013 to
JD0.646 in 2014. This decrease came following 14.84%
decrease in operating profits. PALTEL has been affected
directly by political events in Palestine especially during the
war in Gaza. Net margin recorded 23.90% in 2014 versus
24.47% in 2013.
20132014
91,827,000
85,068,000
Net income
Q uo tes
PSE: PALTEL
Bloomberg: PALTEL.PS
IS IN : P S5 0 02 1 11 9 51
Sec tor : Serv ices
Trad ing Currency: JOD
K ey Ma rk e t Da ta
Da te : 24 /0 2 /2 0 15
Cl os i ng : JOD5 .83
Y TD: 2 .2 8 %
P E : 9 .0 2x
P /BV : 1 .4 7x
5 2 H ig h / Lo w : 6 .6 5 /5 .3 0
Free Float at 49.70%
M. Cap: JD767,373,750
O. Shares: 131,625,000
IRR: 20.14%
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Palestine Telecommunications (PALTEL)
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Earnings Report FY2014
Cost of revenues which represents: telecommunications services costs, license fees and other costs decreased by
12.21% to hit JD62.71 million in 2014. Telecommunication services costs that mainly comprise of interconnection costs
and international roaming due to other telecommunications companies declined by 17.48% hitting JD21.99 million in
2014 and accounting for 35.06% of total cost of revenues. On the other hand, license fees increased by 0.85% hitting
JD27.80 million, accounting for 44.33% of total cost of revenues. whereby PALTEL pays the Palestinian National
Authority PNA a license fee of 7% on all wireline and wireless operating revenues, while other costs that represent
mainly: commissions paid to employees and dealers, cost of mobile handsets sold, cost of SIM cards and prepaid
scratch cards, cost of media services and others decreased by 24.96% standing at JD12.92 million in 2014. In
aggregate a gross profit reached JD293.16 million in 2014, down by 3.51% recording gross margin of 82.38% in 2014
compared to 80.97% in 2013. Administrative and operating expenses increased by 4.00% reaching JD190.77 million in
2014, recording an operating profit of JD103.86 million with an operating margin of 28.97% lower than 2013 by 10.20%.
Investment gains strengthen the bottom line
PALTEL has a portfolio of financial securities that mainly consists of highly liquid stocks with growth potential. The
company invests its excess cash in those securities with the aim of achieving price appreciation. During 2014, PALTEL
recorded investment gains that reached JD3.03 million compared to JD3.87 million in 2013.
Investment strategy of the group has been adding up to the income statement noticeably for the past two years. In the
year 2014, investment gains were a balancing factor given the unexpected drop in revenues resulting from external
factors. In this matter, the Group allocated a major investment portion for recovering the damaged network in order to
maintain services that meet subscribers’ expectation.
Financial performance in 2014
Telecommunications
services costLicense fees
Other costs
26,647,000 27,561,000
17,222,000
21,988,000 27,796,000
12,923,000
2013 2014
2013
2014
303,827,000
293,163,000
121,054,000
103,086,000
Gross Profit Operating Profit
Q uo tes
PSE: PALTEL
Bloomberg: PALTEL.PS
IS IN : P S5 0 02 1 11 9 51
Sec tor : Serv ices
Trad ing Currency: JOD
K ey Ma rk e t Da ta
Da te : 24 /0 2 /2 0 15
Cl os i ng : JOD5 .83
Y TD: 2 .2 8 %
P E : 9 .0 2x
P /BV : 1 .4 7x
5 2 H ig h / Lo w : 6 .6 5 /5 .3 0
Free Float at 49.70%
M. Cap: JD767,373,750
O. Shares: 131,625,000
IRR: 20.14%
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Palestine Telecommunications (PALTEL)
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Earnings Report FY2014
Tax exemption takes inforce in 2014
EBIT reached JD97.06 million in 2014; down by 19.79%
compared to 2013. Interest expense increased following the
higher debt position for the company, recording EBIT margin of
27.27% in 2014 compared to 32.25% in 2013. EBT reached JD
98.90 million in 2014 compared to JD122.45 million in 2013,
down by 19.23%, recording an EBT Margin of 27.79% in 2014.
Tax expense decreased by 54.83% to record JD13.83 million in
2014 recording an effective tax rate of 13.91% in 2014
compared to 25.01% in 2013. In 2014, the company is back to
benefit from 50% tax exemption after it’s BOD decision to
postpone it for the years of 2012 and 2013 has expired. Income
tax rate for PALTEL records 10%.
Financial and real estate investments enrich assets
PALTEL’s total assets increased by 12.68% in 2014 to aggregate at JD750.70 million compared to JD666.21 million at
the end of 2013. This came as a result of an increase by 16.24% in the major contributor to total assets by 75.02%-
noncurrent assets- in addition to an increase of 3.19% in current assets.
Noncurrent assets stood at JD563.18 million in 2014 compared to JD484.48 million at the end of 2013, following an
increase of 4.94% in the available for sale investments that contribute about 27.94% from noncurrent assets to record
JD157.33 million in 2014 compared to JD149.93 million in 2013 divided by local investments that worth JD55.78
million and regional investments worth JD101.55 million. Real estate investments witnessed a growth of 202.35% to
record JD23.01 million in 2014 compared to JD7.61 million in 2013. PALTEL owns 50% stake in Jericho Gate Real
Estate Investment Company.
Item (JD) 2013 2014 ∆
Revenues 375,257,000 355,870,000 -5.17%
Gross Profit 303,827,000 293,163,000 -3.51%
Operating Profit 121,054,000 103,086,000 -14.84%
EBIT 121,003,000 97,059,000 -19.79%
Net Income 91,827,000 85,068,000 -7.36%
Financial performance in 2014
Q uo tes
PSE: PALTEL
Bloomberg: PALTEL.PS
IS IN : P S5 0 02 1 11 9 51
Sec tor : Serv ices
Trad ing Currency: JOD
K ey Ma rk e t Da ta
Da te : 24 /0 2 /2 0 15
Cl os i ng : JOD5 .83
Y TD: 2 .2 8 %
P E : 9 .0 2x
P /BV : 1 .4 7x
5 2 H ig h / Lo w : 6 .6 5 /5 .3 0
Free Float at 49.70%
M. Cap: JD767,373,750
O. Shares: 131,625,000
IRR: 20.14%
7
Palestine Telecommunications (PALTEL)
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Earnings Report FY2014
Investment in associates and Property, Plant and Equipment decreased by 7.67% and 12.83% to settle at JD35.68
million and JD161.33 million in 2014 respectively. On the other hand, an increase was witnessed in materials and
project in progress, by 17.29% and 7.14% to aggregate at JD14.30 million and JD2.67 million respectively.
Current assets – second contributor to total assets by 24.98%- increased by 3.19% to record JD187.53 million in 2014
compared to JD181.73 million at the end of 2013, following an increase in inventories and accounts receivables by
19.50% and 12.78% respectively to record JD3.62 million and JD90.77 million in 2014 respectively. Moreover, other
current assets increased by 13.88% to settle at JD53.18 million in 2014compared JD46.70 million in 2013.
On the other hand, cash and cash equivalents decreased by 27.00% to record JD31.09 million in 2014 compared to
JD42.60 million in 2013. Moreover, financial assets held for trading slightly decreased by 0.67% to settle at JD8.85
million in 2014 divided to local investments that amounted JD4.13 million and regional investments that settled at
JD4.72 million.
Higher debt financing on new long- term loan agreements
Total liabilities increased by 39.65% to aggregate at JD228.37 million in the 2014 compared to JD163.52 compared to
the end of 2013. This was attributable to an increase of 25.03% in current liabilities- the major contributor to total
liabilities by 72.75%- to stand at JD166.13 million in 2014 compared to JD132.87 million at the end of 2013 in addition
to an increase of 103.01% in noncurrent liabilities – the contributor to total liabilities by 27.25%- to hit JD62.23 million in
2014 compared to JD30.65 million at the end of 2013.
Item (JD) 2013 2014 ∆
Property, Plant and equipment 187,091,000 161,334,000 -12.83%
Available-for-sale investments 149,927,000 157,332,000 4.94%
Cash and cash equivalents 42,600,000 31,097,000 -27.00%
Total assets 666,212,000 750,705,000 12.68%
Loans 7,090,000 61,098,000 761.75%
Total Liabilities 163,525,000 228,366,000 39.65%
Paid in capital 131,625,000 131,625,000 0.00%
Retained earnings 312,575,000 331,830,000 6.16%
Shareholders' equity 502,687,000 522,339,000 3.91%
Financial performance in 2014
Q uo tes
PSE: PALTEL
Bloomberg: PALTEL.PS
IS IN : P S5 0 02 1 11 9 51
Sec tor : Serv ices
Trad ing Currency: JOD
K ey Ma rk e t Da ta
Da te : 24 /0 2 /2 0 15
Cl os i ng : JOD5 .83
Y TD: 2 .2 8 %
P E : 9 .0 2x
P /BV : 1 .4 7x
5 2 H ig h / Lo w : 6 .6 5 /5 .3 0
Free Float at 49.70%
M. Cap: JD767,373,750
O. Shares: 131,625,000
IRR: 20.14%
8
Palestine Telecommunications (PALTEL)
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Earnings Report FY2014
During 2014, the company signed new long term loan agreements with local and regional banks with a total of JD53.2
million. Additionally , the group utilized a total amount of JD16.7 million of the overdraft ceiling of JD21.3 million. Total
interest bearing debts recorded JD61.09 million at the end of 2014; increasing by 761.75% compared to the end of
2013. Interest bearing debts to assets ratio increased from 1.06% to 8.14% at the end of 2014, and interest bearing
debts to equity ratio increased from 1.41% to 11.70%. In general PALTEL maintains low debt position but higher than
2013’s. Equity ratio recorded 69.58% at the end of 2014
Book value stands at JD3.97 per share
PALTEL’s shareholders equity increased by 3.91% to
aggregate at JD522.34 million in 2014 compared to
JD502.69 million at the end of 2013 supported by an
increase of 6.16% in retained earnings to amount for
JD331.83 million in 2014 compared to JD312.57 million in
2013. Available-for-sale reserve increased by 3.09% to
record JD11.31 million in 2014 compared to JD10.96
million in 2013.
Book value per share increased accordingly from JD3.82 at
the end of 2013 to JD3.97 at the end of 2014.
Financial performance in 2014
Q uo tes
PSE: PALTEL
Bloomberg: PALTEL.PS
IS IN : P S5 0 02 1 11 9 51
Sec tor : Serv ices
Trad ing Currency: JOD
K ey Ma rk e t Da ta
Da te : 24 /0 2 /2 0 15
Cl os i ng : JOD5 .83
Y TD: 2 .2 8 %
P E : 9 .0 2x
P /BV : 1 .4 7x
5 2 H ig h / Lo w : 6 .6 5 /5 .3 0
Free Float at 49.70%
M. Cap: JD767,373,750
O. Shares: 131,625,000
IRR: 20.14%
Retained earnings
Paid up Capital
Available-for-salereserve
312,575,000
131,625,000
10,967,000
331,830,000
131,625,000
11,306,000
2013 2014
9
Palestine Telecommunications (PALTEL)
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Earnings Report FY2014
Key financial ratios
Item 2013 2014 ∆
Current Ratio 1.37 1.13 -17.47%
Quick Ratio 1.34 1.11 -17.69%
Cash Ratio 0.39 0.24 -37.98%
Net Working Capital 0.07 0.03 -61.14%
Debt to Equity Ratio 32.53% 43.72% 34.40%
Equity Ratio 75.45% 69.58% -7.79%
Loans to equity 1.41% 11.70% 729.33%
Loans to assets 1.06% 8.14% 664.76%
Fixed Assets to Equity 36.82% 30.89% -16.11%
Interest Coverage 83.45 52.66 -36.89%
Total Assets Turnover Ratio 58.51% 50.23% -14.15%
Fixed Assets Turnover Ratio 195.58% 205.46% 5.05%
Working Capital Turnover 768.01% 1663.49% 116.60%
Gross Margin 80.97% 82.38% 1.75%
Operating Margin 32.26% 28.97% -10.20%
Net Margin 24.47% 23.90% -2.31%
ROaA 14.32% 12.01% -16.13%
ROaE 19.11% 16.60% -13.12%
Q uo tes
PSE: PALTEL
Bloomberg: PALTEL.PS
IS IN : P S5 0 02 1 11 9 51
Sec tor : Serv ices
Trad ing Currency: JOD
K ey Ma rk e t Da ta
Da te : 24 /0 2 /2 0 15
Cl os i ng : JOD5 .83
Y TD: 2 .2 8 %
P E : 9 .0 2x
P /BV : 1 .4 7x
5 2 H ig h / Lo w : 6 .6 5 /5 .3 0
Free Float at 49.70%
M. Cap: JD767,373,750
O. Shares: 131,625,000
IRR: 20.14%
10
Palestine Telecommunications (PALTEL)
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Earnings Report FY2014
Fundamentals History
Item 2006 2007 2008 2009 2010 2011 2012 2013 2014
Price 4.96 4.93 4.94 5.14 5.28 5.29 5.15 5.82 5.7
EPS 0.427 0.498 0.678 0.534 0.656 0.689 0.624 0.698 0.646
BV 1.810 2.107 2.528 2.668 2.973 3.257 3.484 3.819 3.968
P/BV 2.74 2.34 1.95 1.93 1.78 1.62 1.48 1.52 1.44
Market cap 652,860,000 648,911,250 650,227,500 676,552,500 694,980,000 696,296,250 956,091,166 1,076,762,867 1,058,197,990
Trading volume 34,553,532 29,285,441 50,671,360 19,622,320 23,510,626 18,191,089 13,731,826 13,223,413 11,737,422
Turnover 5.29% 4.51% 7.79% 2.90% 3.38% 2.61% 1.44% 1.73% 1.11%
PE 11.62 9.90 7.29 9.62 8.05 7.67 8.25 8.34 8.82
Dividends 0.20 0.25 0.40 0.35 0.40 0.40 0.45 0.50 0.45*
Dividend yield 1.72% 2.52% 5.49% 3.64% 4.97% 5.21% 5.45% 5.99% 5.10%
Dividend Payout 46.87% 50.22% 59.04% 65.50% 60.98% 58.02% 72.12% 71.67% 69.63%
*proposed cash dividends for the year 2014
Q uo tes
PSE: PALTEL
Bloomberg: PALTEL.PS
IS IN : P S5 0 02 1 11 9 51
Sec tor : Serv ices
Trad ing Currency: JOD
K ey Ma rk e t Da ta
Da te : 24 /0 2 /2 0 15
Cl os i ng : JOD5 .83
Y TD: 2 .2 8 %
P E : 9 .0 2x
P /BV : 1 .4 7x
5 2 H ig h / Lo w : 6 .6 5 /5 .3 0
Free Float at 49.70%
M. Cap: JD767,373,750
O. Shares: 131,625,000
IRR: 20.14%
11
Palestine Telecommunications (PALTEL)
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Earnings Report FY2014
Stock’s performance in 2014
Key market ratios
Item 2013 2014 ∆
EPS 0.698 0.646 -7.36%
BV 3.82 3.97 3.91%
Earnings Yield 11.99% 11.34% -5.41%
Price to Sales 2.04 2.11 3.27%
Q Ratio 1.15 1.00 -13.08%
Cash to Market Cap 6.72% 5.32% -20.82%
Item 2014
Beta 1.26
High 6.77
Low 5.3
Closing 5.7
Discount to high -15.81%
Premium to low 7.55%
Moving Average Price MAP 5.72
Closing to MAP -0.30%
Volume Weighted Price VWP 6.04
Closing to VWP -5.60%
y = 1.261x + 0.0002
-10.00%
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
-4.00%-3.00%-2.00%-1.00%0.00%1.00%2.00%3.00%
PA
LTEL
's R
etu
rn
Al Quds Index Return
PALTEL's Characteristic Line
Q uo tes
PSE: PALTEL
Bloomberg: PALTEL.PS
IS IN : P S5 0 02 1 11 9 51
Sec tor : Serv ices
Trad ing Currency: JOD
K ey Ma rk e t Da ta
Da te : 24 /0 2 /2 0 15
Cl os i ng : JOD5 .83
Y TD: 2 .2 8 %
P E : 9 .0 2x
P /BV : 1 .4 7x
5 2 H ig h / Lo w : 6 .6 5 /5 .3 0
Free Float at 49.70%
M. Cap: JD767,373,750
O. Shares: 131,625,000
IRR: 20.14%
0
1
2
3
4
5
6
7
8
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1/2/2014 2/2/2014 3/2/2014 4/2/2014 5/2/2014 6/2/2014 7/2/2014 8/2/2014 9/2/2014 10/2/2014 11/2/2014 12/2/2014
12
Palestine Telecommunications (PALTEL)
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Earnings Report FY2014
Item 2012 2013 2014
Current assets
Inventories 8,881,000 1.44% 3,031,000 0.45% 3,622,000 0.63%
Accounts receivable 89,500,000 14.52% 80,490,000 12.08% 90,775,000 15.89%
Prepayments and other current assets 30,296,000 4.91% 46,701,000 7.01% 53,183,000 9.31%
Financial assets held for trading 7,414,000 1.20% 8,909,000 1.34% 8,849,000 1.55%
Cash and cash equivalents 46,213,000 7.50% 42,600,000 6.39% 31,097,000 5.44%
Total Current assets 182,304,000 29.57% 181,731,000 27.28% 187,526,000 32.83%
Noncurrent assets
Property, Plant and equipment 198,651,000 32.22% 185,087,000 27.78% 161,334,000 28.24%
Intangible assets 34,264,000 5.56% 32,552,000 4.89% 30,222,000 5.29%
Projects in progress 3,503,000 0.57% 2,492,000 0.37% 2,670,000 0.47%
Materials 15,827,000 2.57% 12,199,000 1.83% 14,308,000 2.50%
Investment in associates 38,290,000 6.21% 38,676,000 5.81% 35,676,000 6.25%
Available-for-sale investments 84,718,000 13.74% 149,927,000 22.50% 157,332,000 27.54%
Real-Estate Investment 7,138,000 1.16% 7,610,000 1.14% 23,009,000 4.03%
Other non current assets 51,826,000 8.41% 55,938,000 8.40% 138,628,000 24.27%
Total Noncurrent assets 434,217,000 70.43% 484,481,000 72.72% 540,170,000 94.56%
Total assets 616,521,000 100.00% 666,212,000 100.00% 571,267,000 100.00%
Current Liabilities
Accounts payable 41,907,000 26.53% 35,615,000 21.78% 43,973,000 19.26%
Current interest-bearing loans 15,198,000 9.62% 7,090,000 4.34% 34,448,000 15.08%
Income Tax impairments 4,373,000 2.77% 12,552,000 7.68% 14,394,000 6.30%
Other current liabilities 60,229,000 38.13% 77,613,000 47.46% 73,318,000 32.11%
Total Current Liabilities 121,707,000 77.06% 132,870,000 81.25% 166,133,000 72.75%
Noncurrent liabilities
Long Term Loans( non current interest- bearing loans)
7,090,000 4.49% - - 26,650,000 11.67%
Provisions for employees indemnity 29,151,000 18.46% 30,655,000 18.75% 35,583,000 15.58%
Total Noncurrent liabilities 36,241,000 22.94% 30,655,000 18.75% 62,233,000 27.25%
Total liabilities 157,948,000 100.00% 163,525,000 100.00% 228,366,000 100.00%
Paid in capital 131,625,000 28.70% 131,625,000 26.18% 131,625,000 25.20%
statutory reserve 32,906,000 7.18% 32,906,000 6.55% 32,906,000 6.30%
voluntary reserve 6,756,000 1.47% 6,756,000 1.34% 6,756,000 1.29%
special reserve 7,950,000 1.73% 7,950,000 1.58% 7,950,000 1.52%
foreign currency translation -50,000 -0.01% -92,000 -0.02% -34,000 -0.01%
Available-for-sale reserve -593,000 -0.13% 10,967,000 2.18% 11,306,000 2.16%
Retained earnings 279,979,000 61.05% 312,575,000 62.18% 331,830,000 63.53%
Shareholders' equity 458,573,000 100.00% 502,687,000 100.00% 522,339,000 100.00%
Common size balance sheet
Q uo tes
PSE: PALTEL
Bloomberg: PALTEL.PS
IS IN : P S5 0 02 1 11 9 51
Sec tor : Serv ices
Trad ing Currency: JOD
K ey Ma rk e t Da ta
Da te : 24 /0 2 /2 0 15
Cl os i ng : JOD5 .83
Y TD: 2 .2 8 %
P E : 9 .0 2x
P /BV : 1 .4 7x
5 2 H ig h / Lo w : 6 .6 5 /5 .3 0
Free Float at 49.70%
M. Cap: JD767,373,750
O. Shares: 131,625,000
IRR: 20.14%
13
Palestine Telecommunications (PALTEL)
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Earnings Report FY2014
Common size income statement
Item 2012 2013 2014
Revenues 365,852,000 100.00% 375,257,000 100.00% 355,870,000 100.00%
Telecommunication Services Costs 32,374,000 8.85% 26,647,000 7.10% 21,988,000 6.18%
License Fees 26,636,000 7.28% 27,561,000 7.34% 27,796,000 7.81%
Other Costs 23,085,000 6.31% 17,222,000 4.59% 12,923,000 3.63%
Gross Income 283,757,000 77.56% 303,827,000 80.97% 293,163,000 82.38%
Operating & Administrative Expenses 171,698,000 46.93% 182,773,000 48.71% 190,077,000 53.41%
Operating Income 112,059,000 30.63% 121,054,000 32.26% 103,086,000 28.97%
Finance cost 1,478,000 0.40% 1,450,000 0.39% 1,843,000 0.52%
Loss from Investments 6,845,000 1.87% 3,866,000 1.03% 3,031,000 0.85%
Other Expenses 1,903,000 0.52% 1,017,000 0.27% 5,372,000 1.51%
Profit before income tax 105,639,000 28.87% 122,453,000 32.63% 98,902,000 27.79%
Income Tax Expense 23,507,000 6.43% 30,626,000 8.16% 13,834,000 3.89%
Net Income 82,132,000 22.45% 91,827,000 24.47% 85,068,000 23.90%
Q uo tes
PSE: PALTEL
Bloomberg: PALTEL.PS
IS IN : P S5 0 02 1 11 9 51
Sec tor : Serv ices
Trad ing Currency: JOD
K ey Ma rk e t Da ta
Da te : 24 /0 2 /2 0 15
Cl os i ng : JOD5 .83
Y TD: 2 .2 8 %
P E : 9 .0 2x
P /BV : 1 .4 7x
5 2 H ig h / Lo w : 6 .6 5 /5 .3 0
Free Float at 49.70%
M. Cap: JD767,373,750
O. Shares: 131,625,000
IRR: 20.14%
14
Palestine Telecommunications (PALTEL)
Disclaimer
This report is not an offer to buy or sell nor a solicitation to buy or sell any of the securities mentioned within. The information
contained in this report were prepared using information available to the public and sources Sahem Trading & Investment Co
believes to be reliable. Sahem Trading & Investment Co does not guarantee the accuracy of the information contained within this
report and accepts no responsibility or liability for losses or damages incurred as a result of investment decisions taken based on
information provided or referred to in this report. Any analysis of historical facts and data is for information purposes only and
past performance of any company or security is no guarantee or indication of future results .
Contact Details
Sahem Trading & Investment Co,
Ramallah, Palestine
P.O.Box 2187
Direct line: +970-2-2968830 or +972-2-2968830
Head of Research
Majd Khalifeh
Research Analyst Research Analyst
Dima Razzouk Maha Tarazi
Sahem Trading and Investments Co. a registered member at PEX, regulated by PCMA.
Ramallah. Palestine- Tel: 02-2965710 P.O. Box 2187
www.sahem-inv.com
Earnings Report FY2014