The CEO Sipho Maseko highlighted “Our strategy to separate our property and mast and tower portfolio to increase management focus and unlock value for the group is bearing fruit.” It’s difficult to quantify the potential value unlock, if there is even anything with net asset value per share of R57.85.
Normalised HEPS increased 22.6% to 722c, which was more than expected. Telkom mobile subscribers increased by 4.5 million to 9.7 million. And the average revenue per user was stable at R100. Subscriber growth of 85.9% in a saturated market is likely to never be repeated. While competition from new kids on the block like Rain will likely curb revenue per user growth due to their cheaper data costs and imminent roll out of 5G in major metros.
Telkom is trading on a PE of 15.18 at R94 per share. At this price the market is pricing in perfection and believe investors should bank profits.
Trader Tip: Traders looking to profit from a pull back, can short TKG with a stop loss above R100. And an interim target price of R82.00 and a longer-term target price of R70.00. Ratchet your stop loss lower to look in profits as the price falls.
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The week ahead:
Local: Gross Domestic Product (04/06)
Results Due: ANA, CTA, CIL, EEL, LAB, LON, SYG (03/06); PGR, STP, VVO (06/06)
LDT (04/06): ARL, BAW, CML, CMLJ, DCP, GPA, GPB, ILU, INLP, KAL, OAS, PIK, RPL, SPP, SEA, THA, THAJ, TC
Other Economic data releases of interest…
Tuesday: Cash Rate, RBA Rate Statement, GDP, RBA Gov Lowe Speaks (AUS); CPI Flash Estimate (EU); FOMC Member Williams Speaks, Fed Chair Powell Speaks (USA)
Wednesday: MPC Member Ramsden Speaks, Services PMI (UK); ADP Non-Farm Employment Change, FOMC Member Clarida Speaks, ISM Non-Manufacturing PMI (USA); Trade Balance (AUS)
Thursday: FOMC Member Williams Speaks (USA); BOE Gov Carney Speaks (UK); BOJ Gov Kuroda Speaks (JP), Monetary Policy Statement, Main Refinancing Rate, ECB Press Conference (EU), Trade Balance (CAN)
Friday: Average Hourly Earnings, Non-Farm Employment Change, Unemployment Rate (USA); Unemployment Rate (CAN)