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%

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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


IS IN : P S5 0 02 1 11 9 51

Sec tor : Serv ices



Da te : 24 /0 2 /2 0 15


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


M. Cap: JD767,373,750

O. Shares: 131,625,000

IRR: 20.14%

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www.sahem-inv.com


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


IS IN : P S5 0 02 1 11 9 51

Sec tor : Serv ices



Da te : 24 /0 2 /2 0 15


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


M. Cap: JD767,373,750

O. Shares: 131,625,000

IRR: 20.14%

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www.sahem-inv.com


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


IS IN : P S5 0 02 1 11 9 51

Sec tor : Serv ices



Da te : 24 /0 2 /2 0 15


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


M. Cap: JD767,373,750

O. Shares: 131,625,000

IRR: 20.14%

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www.sahem-inv.com


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.


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


IS IN : P S5 0 02 1 11 9 51

Sec tor : Serv ices



Da te : 24 /0 2 /2 0 15


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


M. Cap: JD767,373,750

O. Shares: 131,625,000

IRR: 20.14%

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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%


Q uo tes

PSE: PALTEL


IS IN : P S5 0 02 1 11 9 51

Sec tor : Serv ices



Da te : 24 /0 2 /2 0 15


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


M. Cap: JD767,373,750

O. Shares: 131,625,000

IRR: 20.14%

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www.sahem-inv.com


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%


Q uo tes

PSE: PALTEL


IS IN : P S5 0 02 1 11 9 51

Sec tor : Serv ices



Da te : 24 /0 2 /2 0 15


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


M. Cap: JD767,373,750

O. Shares: 131,625,000

IRR: 20.14%

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www.sahem-inv.com


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.


Q uo tes

PSE: PALTEL


IS IN : P S5 0 02 1 11 9 51

Sec tor : Serv ices



Da te : 24 /0 2 /2 0 15


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


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

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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


IS IN : P S5 0 02 1 11 9 51

Sec tor : Serv ices



Da te : 24 /0 2 /2 0 15


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


M. Cap: JD767,373,750

O. Shares: 131,625,000

IRR: 20.14%

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www.sahem-inv.com


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


IS IN : P S5 0 02 1 11 9 51

Sec tor : Serv ices



Da te : 24 /0 2 /2 0 15


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


M. Cap: JD767,373,750

O. Shares: 131,625,000

IRR: 20.14%

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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


IS IN : P S5 0 02 1 11 9 51

Sec tor : Serv ices



Da te : 24 /0 2 /2 0 15


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


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

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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


IS IN : P S5 0 02 1 11 9 51

Sec tor : Serv ices



Da te : 24 /0 2 /2 0 15


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


M. Cap: JD767,373,750

O. Shares: 131,625,000

IRR: 20.14%

13




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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


IS IN : P S5 0 02 1 11 9 51

Sec tor : Serv ices



Da te : 24 /0 2 /2 0 15


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


M. Cap: JD767,373,750

O. Shares: 131,625,000

IRR: 20.14%

14


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

[email protected]

Head of Research

Majd Khalifeh

[email protected]

Research Analyst Research Analyst

Dima Razzouk Maha Tarazi

[email protected]

[email protected]



www.sahem-inv.com


mailto:[email protected]

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