MTN:SJ
We assign a one-year price target range of R121– R143 per share using a comparables approach from an EV/EBITDA perspective, a fairer metric of MTNs earnings growth. Investors disappointed by the suspension of the dividend could also be pleased by MTN possibly paying a special dividend or buying back shares if the Group can make progress in repatriating funds and delivering on its ARP objectives
MTN has underperformed the broader market and its closest peer Vodacom (VOD) for many years as its exposure to high growth yet volatile markets has made it one of the most undervalued companies on our market. MTNs market capitalisation of R164 billion is 30% lower than VODs of R213 billion, yet its revenues and operating profits are almost twice those of VOD. Over the past few years, VOD has been favoured by investors due to stable returns, operating as a regional player in Southern Africa whereas MTN operates in over 20 countries including risky Nigeria, Afghanistan, and Iran which have regularly been a source of trouble.
In our opinion, MTN is ripe with optionality and represents higher rates of growth. Including opportunities listed above, the expected listing of IHS, a Nigerian tower company in which MTN holds a 29% stake valued at R27.2 billion (as of 31 December 2020), and possible listing of its mobile-money unit valued at approximately $5 billion, can potentially unlock shareholder value to read more click here .
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Fundamental Analysis
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