stc: 2Q26 broadly in-line across the board after adj. with SAR 0.55 DPS announced

研报英文原文证据摘录

stc: 2Q26 broadly in-line across the board after adj. with SAR 0.55 DPS announced

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

stc (Neutral; Price Target: SRls47.00)

Investment Thesis

As Saudi Arabia's leading telecom operator, stc benefits from a structurally attractive

market, anchored by resilient population dynamics (our sensitivity work points to limited

net profit impact from a ~5% consecutive decline in non-Saudi population in 2026/27) and

a supportive regulatory backdrop that limits new infrastructure-based entrants. The core

Saudi connectivity franchise anchors earnings and cash flow with clear scale leadership in

both mobile and fixed, though we see continued B2G pressure from recalibrated fiscal

spending, partially offset by private sector and SME growth. Beyond the core, we see strong

underlying potential in stc's broader thematic exposures: center3 positions stc as a key Saudi

AI / data centre play (i.e. 1 GW capacity target by 2030, HUMAIN JV) supported by cloud

adoption and hyperscaler demand, while stc Bank offers fintech optionality with ambitious

revenue targets, though questions remain on the capacity ramp-up and customer acquisition

economics. While the evolving mix towards lower-margin segments is a headwind, this is

partially offset by ongoing self-help, particularly in workforce and legacy infrastructure

optimisation. With capex stepping up and concerns on working capital volatility from

receivables, we see limited upside to the base dividend given FCFE post lease conversion,

with any additional returns likely catalyst-linked. With shares trading at 16x 26Y P/E for a

5.0% dividend yield, we see the premium vs.