The average target price of YALA is 6.9 and suggests 4% downside potential. Usually, this means a SELL recommendation among investment firms, or a recommendation to decrease one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 8.1. This translates into 13% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 5.5. This is equivalent to 24% downside potential in the worst case. 

Yalla Group Limited operates a voice-centric social networking and entertainment platform under the Yalla name primarily in the Middle East and North Africa region. Its platform offers group chatting and games services; and sells virtual items, as well as provides upgrade services. The company was formerly known as FYXTech Corporation. Yalla Group Limited was founded in 2016 and is headquartered in Dubai, the United Arab Emirates.

Yalla Group Limited

Technology

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

YALA reported revenue of USD 332mn in the last 12 months, up 4% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 0% from FY23 to USD 0.75. Market expects EPS to reach USD 0.74 in FY25.

Over the past six months, the stock has consistently climbed, resulting in 78% total increase. When compared to its international counterparts in the same sector and industry (as shown above), the stock has exceeded their performances, leading by 81ppts in total. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months it exceeded the performance of this peer group by 85ppts and accelerated its growth by 17ppts in the recent month. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 36.1% in the last 12 months, up from 30.3% in FY23. 

Historically, YALA has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 38.4%, a growth from 36.8% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 20.2%, above the peers. The consensus estimate for FY24 for RoCE is 18.6%, again ahead of the peers. 

Yalla Group Limited reported a return on equity (RoE) of 20.0% in the last 12 months, down from 23.3% in FY23. The market consensus projects an RoE of 22.7% in FY24, again ahead of its peers. 

Another important profitability metric, return on assets (RoA), amounted to 17.7% in the last 12 months, a decrease from 20.5% in FY23. The market analysts predict that RoA will be 20.1% in FY24, again stronger than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.8 in the past several years. This ratio implies a strong shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

YALA has above average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is relatively stable and is unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve significantly. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability, solid return on capital, strong debt servicing capacity, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to excessive margin volatility, poor working capital management.

In highly turbulent market conditions, YALA is volatile. In other words, the stock will fall much more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be large. 

In normal market circumstances, YALA is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

From both historical and forecast perspectives, the stock is moderately underpriced compared to similar stocks. In particular, the stock is underpriced on P/E, 'cheap' on EV/EBITD. 

Yalla Group Limited

$ 7.2

4

Yalla Group Limited

$ 7.2

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 7.2

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