* Lifts target to 8.90 riyals from 6.40 riyals
* Expects co to restructure capital by Q3
Feb 13 (Reuters) - Increased optimism on successful
capital restructuring will help Zain Saudi Arabia to
further narrow its valuation gap with peers through 2012, Riyad
Capital said and raised its price target on the telecom
operator's stock by nearly 40 percent.
"Clearly the restructuring overhang was hampering share
performance and now with the endgame in sight, we believe
prospects for valuation multiples expansion have increased," the
brokerage said in a note to clients.
In January, Zain Saudi said it has approval to extend the
maturity of its 9.75 billion riyal ($2.6 billion) Islamic
financing facility for an additional six months.
The brokerage, which raised its price target on the stock to
8.90 riyals from 6.40 riyals, also expects the company to gain
from strengthened balance sheet, easing capital expenditure
pressure and its redirected focus on operating performance.
Riyad Capital cut its debt forecast on Zain Saudi to 11.9
billion riyals from 16.7 billion riyals in the year-ago quarter
and said it expects the company to complete its capital
restructuring and debt refinancing by the end of third quarter.
The brokerage maintained its "buy" rating on the stock.
Shares of the company, an affiliate of Kuwait's Zain
, closed at 7.35 riyals on Sunday. The shares have
risen 20 percent since the company announced the extension to
its credit facility on Jan. 28.
(Reporting by Sweta Singh in Bangalore; Editing by Maju Samuel)
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