Hermes Financial Group expects value of STC share to increase by 14%

The latest report issued by Hermes Financial Group praised STC Group’s current organizational infrastructure, describing it as more sophisticated than ever before, and also praised the Group’s positive developments in the field of transparency and communication. The report noted STC is aware that lack of transparency is one of the most important issues that worries investors, and confirmed its neutral classification for the fair value of STC share with expectations of a 14% increase. 

The Hermes report focused on the details of STC’s latest foreign operations, which consist of the USD 1.2 billion funding deal conducted with Indonesian company Axis. The report also described Axis as a strategic operator that is willing to gain a market share in a highly competitive market dominated by three main incumbents, noting that the company is planning to double its annual revenue for 2012 to exceed USD 1 billion for the next five years. The report also said that international operations should contribute 50% of STC’s total revenue versus the current 33%, which is higher than Hermes 40% estimate. 

The report also points out STC is intending to focus its international expansion mainly on opportunities in the Middle East. Syria was the only actual opportunity mentioned and STC made it clear they are very interested in that exposure, which convinced Hermes that STC will be very aggressive in their approach to operate Syria’s third mobile license.