Money Markets
By GEOFFREY IRUNGU, girungu@ke.nationmedia.com
Standard Investment Bank (SIB) has upgraded its valuation of listed telecoms giant Safaricom following its increased subscriber numbers and a jump in earnings per share (EPS) in the first half-year.
The investment bankers said the EPS of 45 cents showed the
full-year figure is likely to exceed its earlier forecast of 80 cents.
“The company posted a 22.9 per cent year-on-year
jump in EPS to Sh0.45 on target to beat our financial year 2016 EPS
target of Sh0.80,” said SIB research analysts Eric Musau and Faith
Waitherero in the report.
The company’s subscribers increased by 1.8 million
to hit 25.1 million total in the first half of the year that ends in
March 2016.
“In financial 2016 (ending next March), Safaricom
is on track to deliver the largest annual increase in new subscribers in
over five years with 1.8 million additional subscribers in 1H16
(April-September 2015) alone,” said the analysts.
The report raised the fair value of the company’s
share by 32.7 per cent to Sh18.50, indicating a potential upside on
yesterday’s price of Sh15.75. The fair value is the price of a share
justifiable by its fundamentals.
“In our estimates, despite the resilience of voice,
we expect it to start contributing less than 50 per cent of total
revenue from 2018 onwards (2015 – 55.9 per cent) driven by growth in
data and financial services revenue,” the analysts wrote.
To show the declining role of voice in the firm’s
operations, non-voice revenue now accounts for 47 per cent of revenue up
from 42 per cent of the previous year, with M-Pesa revenue up 24.1 per
cent year-on-year to Sh19.4 billion while mobile data was up 40.9 per
cent at Sh9.2 billion.
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