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Q3 revenues and EBITDAaL, up respectively by 1.8% and 1.4% yoy, were in line with expectations. Capex was down by 7% yoy also in line with the target of a significant reduction in 2023.
Orange is still awaiting a ruling regarding the merger of its Spanish activities with MasMovil. However, Christel Heydemann appeared confident that the transaction can be completed in the Q1 2024.
For the past year Orange has been in a virtuous circle of FCF growth: we maintain our Buy.
Companies: Orange (ORA:EPA)Orange SA (ORA:PAR)
Q2 revenues were slightly better than expected, up by 2.6% yoy and lfl while the EBITDA was more in line with expectations, up by 1% yoy and lfl. The only weak point of the release was the expected pronounced decline in the Enterprise EBITDAaL which should only improve from 2024.
The clear positive is that, in 2022, the group entered a virtuous circle of vigorous FCF growth for the coming years. We maintain our strong buy on the stock.
Q1 revenues were in line with expectations, up by 1.3% yoy and lfl while the EBITDA was up by 0.5% yoy and capex down by 5%. Note that the EBITDA margin is traditionally lower in the Q1 and the next few quarters will further benefit from the price increases introduced in early 2023.
This Q1 confirms that, in 2022, the group entered a virtuous circle of vigorous FCF growth for the coming years.
We maintain our Buy on the stock.
The Q4 performance was pretty much in line with our expectations.
The key point is that Orange has announced it will increase its dividend floor to 72 euro cents for 2023, and to 75 euro cents for 2024. Very good news indeed in that only three months ago the group had dashed our hopes of a 2022 dividend increase despite the sharp expected rise in Orange’s cash flow in 2022 (+27% yoy).
We maintain our Buy on the stock.
Nothing special to say regarding the Q3 performance which was pretty much in line with our expectations, with a reassuring Spain but a modest growth slow down in Africa.
The key point is that having confirmed its outlook of EBITDA growth coupled with a capex decline, the group had been expected to increase its dividend. Unfortunately this will not be the case. Since Telcos are yield stocks and shareholders have been overlooked, this news is likely to weigh on the stock in the coming months.
A decent set of Q2 results for Orange with stable revenues yoy in reported terms and EBITDA up by 4.5% yoy (adjusted for the co-financing).
With a forecast of a fairly significant increase in EBITDA less capex, the group should be able to steadily increase its dividend from 2023.
We stick to our Strong Buy on the stock. However, in the short term, the rotation toward quality growth stocks at the expense of telcos is likely to continue.
Companies: Orange SA (0OQV:LON)Orange SA (ORA:PAR)
The Q1 figures were in line with our expectations but they confirmed the outlook for 2022 of an EBITDA growth of 2.5/3% and a c.5% decrease in capex.
We still expect the group to enter a virtuous circle of vigorous FCF growth in the coming years allowing steady dividend growth. So we stick to our Strong Buy. Orange deserves to return to the best-in-class group in the telecom sector consistent with its 4.5% dividend yield.
Orange and MasMovil announced this morning the combination of their operations in Spain.
The combined entity would become a strong second player in Spain with revenues of €7.5bn (vs €12.5bn for Telefonica), EBITDAaL of €2.2bn. It is expected to generate €450m of synergies from the third year post closing onwards.
So, clearly a nice leaving gift for Orange from its future ex-CEO Stephane Richard.
We maintain our Buy on the stock.
Nothing special to say about the Q4 results which were in line with expectations. For the whole year, revenues were up by 0.8% yoy and lfl, while EBITDA was down by 0.5% yoy.
The key point is indeed the outlook for 2022 which is finally as we hoped. EBITDA should grow by 2.5-3%, while capex should decrease by 5%. The time has arrived to see a regular increase in the FCF in the coming years.
We stick to our Strong Buy.
A correct Q2 for Orange but the poor EBITDA outlook for 2021 has been confirmed and the dividend proposed for 2021 will be stable at €0.7. So nothing to wake up the stock.
The group is not expensive compared to its peers, and it offers an enticing c.7.5% dividend yield. Although not for this year, the group could surprise the market by a higher dividend increase than expected in the coming years. We stick to our Strong Buy.
The EBITDAaL was eventually down by 1% yoy but should have grown by 3.2% excluding the COVID-19 impact.
Despite this solid performance and the return to normal of its dividend, the stock is still languishing 20% below its pre-pandemic levels.
At first investors were also quite circumspect about Orange’s determination to keep its new towers company within the scope of the group. But later, Stephane Richard made it clear that Orange won’t go it alone in the towers space.
Companies: Orange SA
A decent Q3 for Orange as the impact of COVID-19 was more limited than in Q2 with only the sharp decline in roaming due to travel restrictions.
The key point of this release is, however, a proposed return to a €0.70 dividend for 2020 (with an interim dividend of €0.40 in December).
We maintain our Strong Buy on the stock with a 7.75% dividend yield for the coming 12 months.
Q2 revenues were down by only 0.4% yoy and the impact of COVID-19 was indeed very limited. This correct Q2 performance reflects a better than expected solid growth in France.
But, more importantly, given an expected stable EBITDA less capex in 2020, Orange will pay a dividend of €0.70 for 2020 (to be confirmed after Q3). So a return to normal which deserves a better price. We maintain our Strong Buy on the stock.
Orange presented yesterday its new strategic plan “Engage 2025”. The stock was, however, down by 4% yesterday while the group refused to commit to increasing its dividends over the period.
We maintain, however, our opinion at Buy on the stock with a significant upside.
Q2 revenues were up by 0.7% yoy and lfl, a satisfactory number and better than the zero growth recorded in Q1. The correct Q2 performance reflects this time a very solid resilience in France (+0.4%) and an acceleration in Africa & Middle East (+5.8%), while Spain was disappointing with revenues down by 1.6% due to a highly promotional market.
EBITDA has grown by 2% yoy and lfl and was slightly above expectations.
We maintain our Buy on the stock.
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Please find below our weekly update covering themes that we feel that are of interest to investors and participants in the small and mid-cap TMT sector as well as commentary on recent newsflow.
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9th August 2023
Status of this Note and Disclaimer
This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object
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