Solutions by stc: Solid 2Q26 beat with FY26 guidance looking conservative as contract deployment ramps in 2H

研报英文原文证据摘录

Solutions by stc: Solid 2Q26 beat with FY26 guidance looking conservative as contract deployment ramps in 2H

Karin So AC CEEMEA Equity Research

(971) 4561-2090 29 July 2026 J P M O R G A N

karin.so@jpmorgan.com

Investment Thesis, Valuation and Risks

Solutions by stc (Neutral; Price Target: SRls243.00)

Investment Thesis

As the market leader in Saudi Arabia’s highly fragmented IT services sector, supported by

its one-stop-shop offering and deep integration with the stc ecosystem, we view Solutions

as a key beneficiary of the Kingdom’s digital transformation agenda. This is underpinned

by (a) the stc relationship, which continues to provide scale advantages, commercial reach

and a steady pipeline of opportunities, and (b) a growing focus on monetising private sector

demand and rebalancing the business towards more recurring and higher margin streams

through PPP engagements. That said, despite these efforts, the revenue mix remains tilted

toward legacy and commoditised segments, which we see as increasingly competitive and

price-driven. The global IT services sector has been going through a narrative of AI-driven

deflation. While we do not see this narrative fully playing out in the region given differences

in IT spending penetration and the demand for work related to AI and data centres, we

question whether similar dynamics may eventually emerge locally as AI-enabled

productivity gains become more widespread and client sophistication rises, thereby further

intensifying pricing competition over time. In addition, while we acknowledge ongoing

initiatives to scale higher-value offerings, improve mix and drive operating leverage, we

remain cautious on the margin trajectory. We are concerned that an increasingly aggressive