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Last week Telefonica announced the launch of an offer for its German subsidiary, released its Q3 numbers and presented its guidance for 2024-26. Regarding TEF Deutschland, we believe that Telefonica has launched a very timely and good offer. The new strategic plan is not that surprising, but the future regular growth in FCF is promising. We believe the current dividend to be secure (it could even be increased from 2024). We maintain our opinion at buy on the stock.
Companies: Telefonica SA
AlphaValue
Telefonica released a solid Q2 with the expected 3.3% revenue growth but a good EBITDA progression of 3.5% despite higher energy costs and personnel expenses. We are confident about the group’s objectives for 2023 and therefore believe the 2023 dividend to be secure. We even think it could be increased from 2024. Our target price is probably too ambitious in the short term and a price of €4.6 is more reasonable (implying a 6.5% dividend yield).
Telefonica released a mixed Q1 with a solid 4.9% yoy organic revenue growth but an EBITDA up by only 1.1% due to higher energy costs and personnel expenses. Capex was however down by 0.7% and EBITDA less Capex was therefore up by 2.1%. Cash flow should grow modestly in 2023 and we are thus comfortable with the dividend for 2023. We maintain our opinion at buy on the stock.
Telefonica released a solid Q3 with 3.8% yoy organic revenue growth and EBITDA up by 3.1% yoy. Telefonica is still a Spanish story, with high potential in the UK and Brazil, plus solid assets in Germany. The dividend yield is 8.5% despite a steady increase in FCF in the future. We maintain our strong Buy on the stock (which lost 25% in Sept-Oct and has recovered by 7.5% in the past week).
A solid Q2 with a 5.2% yoy organic revenue growth and an EBITDA up by 3.4% despite increasing energy costs in Spain. Telefonica is still mostly a Spanish story, with high potential in the UK and Brazil, plus solid assets in Germany. The dividend yield is 6.8% despite a steady increase in FCF in the future. We maintain our Buy. However, in the short term, the recent rotation toward quality growth stocks at the expense of telcos is likely to continue.
Organic Q1 revenue growth was in line with expectations at 3.2% yoy, while EBITDA was up by only 2.1% yoy and lfl due to a significant increase in the cost of energy and the higher growth in lower margin revenue in Spain. EBITDA less capex was however good, up by 6.4% yoy due to a 4.9% decline in capex. The dividend yield is 6.45%, above the 4% for the sector best in class: we maintain our Buy.
Q3 was globally in line with expectations. Things are still tough in Spain but Germany is a very strong asset while Brazil and the UK are deploying fibre networks which should bear juicy fruits in the future. Hispam operates as an autonomous company which could soon be sold as a whole or piecemeal. Our significant upside is commensurate with the incredibly low levels reached one year ago. The stock has partly recovered but is still 35% under its pre-COVID-19 levels.
The Q2 numbers are slightly better than expected. Telefonica has also upgraded its outlook for 2021. The dividend cut of last year, the recent sale of its telecommunications towers division in Europe and in Latin America for €7.7bn to American Tower, the merger with Virgin in the UK, the reduction in net debt and a quite correct H1 performance should indeed help restore market confidence. We maintain our opinion at Buy on the stock.
Q4 numbers were in line with expectations and quite reassuring. Telefonica has, however, preferred to cut its dividend by 25% (at €0.3 vs €0.4 previously) to preserve its cash flow while its investments will remain substantial in the coming years. So after the recent sale of its telecommunications towers division in Europe and in Latin America for €7.7bn to American Tower, this cautious cut could indeed help restore market confidence. We maintain our opinion at Buy on the stock.
Telefonica announced this morning that its subsidiary Telxius has signed an agreement with American Tower for the sale of its towers division in Europe for €7.7bn. It’s indeed an impressive price and TEF succumbed logically to the sirens of American Tower to reduce its debt a little more. We maintain our opinion at Buy on the stock.
Telefónica remains on track to deliver its 2020 outlook of flat EBITDA-capex yoy in organic terms but… at constant currency. The Forex headwind is however a storm in Brazil (-30% yoy). The stock is trading at a 55% discount to its February level. The dividend yield is nearly 15% reflecting the market’s major concern about its sustainability. Even if the group ends up lowering its dividend due to this Forex storm… we maintain our Buy opinion.
A poor Q2 performance for Telefonica although this had been expected given, in particular, the double penalty linked to the South American currency weakness vs the Euro (in particular the Brazilain Real) during the pandemic. For 2020 Telefónica nonetheless remains on track to deliver a slightly negative to flat EBITDA-capex yoy in organic terms but… at constant currency. The key point thus remains that the 2020 dividend is confirmed at €0.40.
The Q1 is in line with our expectations. Telefonica’s revenues could decrease by 5% in 2020, exceeding the top range of our own estimates of the COVID-19 impact on a telco’s account but this is due to the recent steep decline of South American currencies. As capex should decline like EBITDA, cash flows are not in danger and the group confirmed its dividends. The creation of a JV bringing together Virgin and O2 is strategically and fundamentally a good deal.
Telefonica has approved a 5-point plan which is supposed to mark a new era for the company. The key point seems the focus on the four markets which represent today 80% of Telefonica’s business and where the group is a solid leader. In parallel, the operational spin-off of Hispanoamerica seems to show the group’s willingness to disengage at term from these activities. It’s a very interesting perspective on the long term. We maintain our Strong Buy on the stock.
Nothing extraordinary about the Q2 release. Q2 revenues were up by 3.7% yoy and lfl, exactly like in Q1, while the adjusted EBITDA has increased in parallel by 1.6%, a number still a little bit weak compared to the revenue growth. It seems that management was indeed quite right to give a cautious guidance for 2019 with both revenue and EBITDA growth of around 2% (and a dividend unchanged).
Research Tree provides access to ongoing research coverage, media content and regulatory news on Telefonica SA. We currently have 0 research reports from 2 professional analysts.
Gamma’s results for the year ended 31 December are in line with the expectations confirmed in the January trading update. Revenue of £521.7m is 8% ahead of FY22, with gross profit at £267.2m showing the same progress. Adjusted EBITDA grew by 9% and PBT by 10%, although the impact of higher tax rates was seen in the 5% increase in adjusted EPS. Cash generation was strong once again, with 108% adjusted cash conversion. Year-end cash of £134.8m is £42.3m above the year before, even after the £30.5m
Companies: Gamma Communications PLC
Progressive Equity Research
SRT Marine Systems has reported a change of year end from 12-months to March 2024 to 15-months to June 2024, with revenue forecasts extended by three months for both new year ends, and an encouraging operational update. The company is concerned that government related paperwork on two existing CG projects (SEA and ME) may not be completed in time for a March invoice and risks falling into the next quarter. In one jurisdiction where there a number of new project prospects, the company must meet s
Companies: SRT Marine Systems plc
Cavendish
Companies: PHC SRT DCTA
Gamma’s trading update for the year ended 31 December confirms adjusted EBITDA and adjusted EPS in line with market consensus (£113.8m-£116.0m for adj. EBITDA and 74.2-77.4p for adj. EPS). Business is performing well and making progress with the development of its product offering, while Enterprise is winning notable contracts. In Europe, Gamma has made strong financial progress. Year-end cash was £134.8m (FY22: £92.5m) with operating cash conversion over 100%. The statement refers to an update
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.
Companies: TXG CPX SSIT TXG BVC MWE CHSS
Allenby Capital
Filtronic has reported results in-line with management expectations for H1/24, and now expects to perform ahead of our forecasts for FY24E and FY25E in terms of revenue and profit. We are raising our revenue forecasts for FY24E and FY25E by 14.6% and 6.2% respectively, and our EBITDA forecasts by 85.2% and 28.0% respectively. The increase in expectation is driven by a strong recent acceleration in order flow, including a £7.8m order announced today. In this report we present a detailed review of
Companies: Filtronic plc
CyanConnode provides end-to-end communications platforms that connect Internet of Things (IoT) devices such as smart meters to a utility's billing system. The company is a global player and a market leader in India, where a new government scheme, as set out below, has mandated the procurement of 250m meters by March 2025, a significant market opportunity for CyanConnode.
Companies: CyanConnode Holdings plc
Zeus Capital
CyanConnode’s H1 results position the company to meet our full year forecasts. The company does not need to grow revenue yoy in H2 in order to meet full year estimates. The Indian smart metering programme appears on track, with 98m smart meters already awarded to prime bidders and these orders should soon filter down to competitively well positioned subcontractors such as CyanConnode. These market drivers position the company well to grow revenue 39% in FY24 and 111% in FY25 and for a £1.9m of o
CyanConnode has received a large Letter of Award (LOA) for Omnimesh Cellular Modules (CNICs) from a Thai customer.
Companies: FTC ELIX GEM ADF
18th May 2023 @HybridanLLP 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 objectiv
Companies: OHG IDOX IMM SAR SRT NEXS GWMO KIBO
Hybridan
5th September 2023 @HybridanLLP 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 obj
Companies: TXG TXG JSG MBH TRX SBTX GAMA EVG
Dish of the day Joiners: No joiners today. Leavers: Egdon Resources has left AIM. What’s cooking in the IPO kitchen?** Announced ITF 12 July: Substrate Artificial Intelligence, an artificial intelligence company based in Spain that creates, buys and scales companies around AI in diverse sectors such as fintech, agritech, energy, human resources, and health, intends to join the Access Segment of the AQSE Growth Market. Admission delayed. Announced ITF 6 July: Blackpoint Biotech plc, a medical can
Companies: AXL FTC AMS DEMG ALBA BGO BPM CRCL ORCA
CAP-XX Ltd* (CPX.L, 10.0p/£44.2m) H1 update: Revenue growth and positive order book update (09.02.21) | Starcom plc* (STAR.L, 0.85p/£*3.0m) FY update: SaaS revenue provides some visibility (10.02.21) | Location Sciences Group plc* (LSAI.L, 0.525p/£3.1m) FY update: Challenging year, growth in Data & Insights (11.02.21)
Companies: CPX SORT TRAC
Companies: CLBS SCE IGP FTC SRT GDR TRCS ELIX
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