By Nkiruka Nnorom
FINANCIAL analysts have said that the shares of MTN Nigeria Communications Plc is under-priced and pegged the price at N171.7 per share by the end of the year. The telecommunication giant listed its shares on the Nigerian Stock Exchange, NSE, May 16, 2019. The share price has since risen by 51.7 percent from the listing price of N90.00 to N136.50 at close of trading last weekend.
In an equity report, analysts at United Capital Plc, said that MTN has an upside potential of 25.7 percent and a price earning (PE) ratio of 13.9x compared to 20.4x for peers, implying a fair price of N194.5 per share.
“MTN grew its full year 2018 revenue by 17.1 percent year-on-year (y/y) to N1 trillion while profit after tax surged 79.7 percent y/y to N145.7 billion. Also, it paid N50 billion and N111.6 billion as dividends in 2017 and 2018 respectively, translating to a Dividend per Share (DPS) of N2.5 and N5.5 at a payout ratio of 70 percent over the period.
“In Q1, 2019, MTN reported a revenue growth 13.2 percent y/y to N282.1 billion. If annualized, this translates to N1.13 trillion by full year 2019. As such, Earnings per Share (EPS) and Book value of equity per share (BVPS) numbers both seem likely to settle at c.N9.5/share,” they said.
“At a dividend payout of 80 percent compared to 70 percent average in 2017 and 2018, we estimate DPS at N7.6, which implies a dividend yield of 5.7 percent. Again, Return-on-Equity (ROE) was 87.7 percent in 2018, which is consistent with expected ROE of +90 percent for 2019”, they added.