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MTN

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Hali
Super Contributor
MTN - Where to from here? Profit after tax in Nigeria is 190Bn Naira.. That's around 16billion ZAR.. Based on last years profit contributions Nigeria is approx. 37% of the company.. Last years profit after tax was R37billion, we know that Nigeria full year this year is R16billion, lets say the rest of the group equals Nigerias profit that will take full year profit after tax to R32bn.(This is highly prudent given last year Nigeria was 37% and not 50%). The market cap is currently around R220bn, so based on that we get a PE of 6.85?? Lets add R70bn to the market cap for the fine, that still gives us a PE of 9.. I think this is majorly oversold and the market overshot it to the downside. Fair value for me would be around R150 per share.
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SimonPB
Valued Contributor
then you buy it surely ?!
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Hali
Super Contributor
I am long from Friday when it dipped under R120
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Hali
Super Contributor
Simon is my logic and thinking patterns correct? or am I missing something?
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SimonPB
Valued Contributor
largely yes(ish) .. of course if we in bear market nothing matters but shorting or watching .. and then three issues I would add, Iran opening up, they have a pile of cash there .. a broken corporate culture (which is hard to price but so far has cost R70bn) .. ultimately they are a utility and should trade on single digit PE ?? For me the last two make me stay away
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Hali
Super Contributor
If we look at VOD its trading at a 16 PE. So based on that point 3 will fall away. I agree with point 2.. But as an investor as long as management deliver me returns I don't mind allowing them some mistakes along the way.. Given the markets they trade in, you cant expect smooth sailing.
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SimonPB
Valued Contributor
VOD is way expensive, as are most defensive stocks right now, but decent DY, this sort of stock should offer serious DY .. as for point 2, yip my view is no chance I want that sort of management managing my companies .. I want awesome management, but that is a contentious point with many disagreeing with me ..
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Hali
Super Contributor
Simon what's your fair value price of Mtn given the fears u mentioned above. Surely the company is worth something?
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partridge
Super Contributor
They will face competition in Iran with Turkcell. The point is that management as indicated is where the trust is placed - or not as the case might be. So while I am thinking they should have some slack given them while they sort out their biggest problem - Nigeria - I am still worried that they have not come out with a statement or evidenced program indicating a future meaningful effort to address the trust in management issue. For goodness sake - what does it take to communicate what they are ACTUALLY doing to avoid A RECURRENCE OF the rubbish investors ( not me ) have experienced?- So far "not a lot" ? Equals: if they don't EVIDENCE a new corporate culture then we are going to have to wait until they have actually delivered on some kind of a track record - maybe a year's time... All very unco- ordinated at present = see you later ( at best)
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Hali
Super Contributor
Whats your fair price an MTN share should be trading at? and whats the logic for that price
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partridge
Super Contributor
The answer to that depends on the information you have to hand. The problem is that we may not have all the information needed to determine a fair price. And only management can take steps to set that right- obviously one might look at a break- up price but who is going there?
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SimonPB
Valued Contributor
I don't have a FV, it likely higher if I did .. but again news breaks of a rotten corporate culture and share selling off again, FV meaningless in short term .. trend is down, be short or be out (I am out)
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