Vodafone released this morning a solid Q1 in terms of revenue, a good performance that is quite logical however as there is partial recovery compared to Q2 20. Remember, the key point which had worried the market three months ago with the annual release was that free cash flow would be only €5.2bn for 2021/22 vs €5bn in 2020/21 but vs €5.7bn in 2019/20. Vodafone has confirmed this number this morning. We maintain our Buy opinion on the stock.
Companies: Vodafone Group Plc
At first sight a reassuring release with a correct EBITDAaL outlook… if there was not a worrying detail: capex will be higher than expected. The stock was indeed down by 5% this morning. Capex should indeed grow by 6% yoy in 2021/22 but, as for most telcos, this is for a good cause. Certainly the dividend should remain flat for 2021/22 but, given its current 7.5% dividend yield, we maintain our Buy recommendation on this stock with increasingly solid German fundamentals.
Service revenues returned to slight growth in Q3, as they were up indeed by 0.4% yoy: an expected number confirming, however, an improving trend as they were respectively down by 0.4% and 0.8% in Q2 and Q1. We believe that Vodafone should be able to maintain its dividend at its current levels. Given the modest growth that the group should clock in the coming years, notably in Germany, we maintain our Buy recommendation on the stock which is still 12% below its pre-COVID-19 prices.
As in Q1, a quite correct resilience to the COVID-19 impacts in Q2. The good news is indeed the H1 EBITDAal margin, which was stable yoy despite the slight decline in revenues. Free cash flow should therefore be at least €5bn for the whole year. So we have no concerns about Vodafone’s dividend and we remain at Buy on the stock.
An expected resilience to the COVID-19 negative impacts in Q1. The group can indeed congratulate itself on having strengthened in recent years its fixed activities: in Germany, which represents 40% of Vodafone’s activities in Europe, service revenues were flat yoy in Q1. The monetisation of its infrastructure assets is continuing and, given the slight growth that the group could offer in the coming years, we maintain our Buy on the stock.
Quite a good Q4 supported by improving commercial momentum in Europe. The annual EBITDA grew eventually by 2.6% yoy reflecting the cost programme’s success. The €0.09 dividend is maintained. Vodafone is more highly indebted after its deal with Liberty-Global, but its dividend (cut last year) seems now more in harmony with its balance sheet. Besides, the monetisation of its infrastructure is continuing. Given therefore the slight growth Vodafone should offer in the coming years, we maintain our
A quite correct H1 for Vodafone with a return to growth in terms of revenue in Q2. The performance is still very solid in Germany (which will represent next year 30% of Vodafone’s revenues) and trends are improving in South Africa, Spain and Italy despite fierce competition or regulation. We maintain our opinion at Add on the group with a 15% upside.
The correct but not more than a Q1 trading update has been largely overshadowed by the announcement in parallel of the creation of Europe’s largest tower company with preparations underway for a variety of monetisation alternatives, to be executed during the next 18 months, including an IPO. The EV of this company could be at least of around €13.5bn. It is obviously excellent news and could be the catalyst that everyone expected to boost the stock, finally. We maintain our strong Buy.
Vodafone has released its annual results. Although there was not much new on the operational side, the dividend was cut to €0.09, as was unfortunately expected (but it was probably the right thing to do). This corresponds to 6% of yesterday’s stock price (vs 10% previously). The major telcos, offering a 4.5-5.5% yield, lend it some upside if the market has confidence, like us, in the sustainability of the dividend. We maitain our Buy on the stock.
Although the Q3 numbers are not so bad and the dividend for 2018/19 should be maintained, the pressure on the stock to make Vodafone cut its dividend could continue in the coming months with uncertainty about future Vodafone numbers once the acquisition of Liberty Global’s operations in Germany, the Czech Republic, Hungary and Romania is completed. The only thing that could reassure the markets today would be the sale of some tower assets.
Following a correct H1 release from an operational viewpoint, management has announced it intends to propose a total dividend of €0.1507 per share for 2018/19, stable yoy. So, we still do not see a case for a cut in the dividend for 2018/19 or 2019/20. This is why we are sticking with our Buy opinion.
Q1 revenues declined by 2.1% yoy but this includes a 2.8% negative impact from forex and a 0.8% adverse impact from the disposal of Vodafone Qatar. On an organic basis, service revenue was quite as expected, increasing indeed by 0.3%. A number slightly lower than the 1.4% recorded in Q4 which still reflects strong growth in AMAP, but which was mitigated by a decline in Europe driven by the drag from UK handset financing and the EU roaming regulation. Excluding these factors, Europe grew by 0.5%
In terms of service revenues, Q4 was quite as expected with organic growth at constant change of 1.4%, slightly better than the +1.1% recorded in Q3 but lower than the 2% recorded in H1. European growth, which had moderated to 0.3% in Q3, was 0.6% (excluding the positive impact of a legal settlement in Germany). Note that, in Europe, the increased drag from roaming regulation was completely offset by an improved global performance in mobile. In parallel, growth in AMAP was still strong at +7.7%
Vodafone agreed two days ago to acquire Liberty Global’s operations in Germany, the Czech Republic, Hungary and Romania for an EV of €18.4bn. This deal values the acquired operations at 10.9x their current EBITDA before synergies but management expects to generate cost and capex synergies before integration costs of €535m per annum by the fifth year after completion (thus valuing these activities at 8.6x their future EBITDA before integration costs). Vodafone intends to finance the acquisition u
In terms of service revenues, Q3 was a little bit disappointing with organic growth at constant change of 1.1%, slightly lower than that recorded in the previous quarter (1.3% in Q2). European growth moderated to 0.3% or 1.9% excluding the impacts of the roaming regulation and the handset financing in the UK (these growths are indeed 0.5% below the Q2 numbers). Note, however, in parallel, growth in AMAP was still strong at +6.8% during the quarter (vs 6.2% in Q2). Note also that, as usual, repo
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Calnex Solutions has announced that due to continued strong levels of trading throughout H1/22, expected to be maintained in H2/22, FY22E revenue and profitability are anticipated to be materially ahead of expectations. We have consequently upgraded our PBT forecasts for FY22E and FY23E by 27.2% and 20.4% to £5.6m and £6.0m respectively. Calnex continues to accelerate its investment in R&D and broaden its product roadmap to benefit from the significant underlying growth drivers within the worldw
Companies: Calnex Solutions Plc
Cyanconnode has released a strong trading update, highlighting the material jump in activity we factor into our forecasts. The Company is delivering on growth opportunities despite the challenges associated with COVID and global supply chains and expects to meet market expectations for the year. We remain buyers.
Companies: CyanConnode Holdings plc
Exactly one year ago, the FTSE 100 closed at 5,862, having fallen 100 points on the day, the lowest point since mid-May 2020, due in part, to the strength of sterling vs US$ at $1.34. One year on, the FTSE 100 has risen to 7,119, a rise of 21%, it remains 7% below the peak in January 2020. From an international viewpoint, US and European markets continue to trade at record highs. The US Federal Reserve is close to withdrawing some of its economic support this year as inflation picks up and the e
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What a difference a year makes - 12 months ago, the focus, quite understandably, was on the course of the pandemic and the lifting of the Lockdown (1) measures. For investors, it was the sustainability of the rally in markets seen since March 2020. Today, while we are still thinking about the lifting of lockdown measures, we are also concerned about two “old favourites” from previous decades. Inflation and the parlous state of public finances. The BoE has said that although CPI inflation rose to
Companies: AEMC BVC BAG BRSD BWNG CBOX CEG CTG CLG CML CRPR DNK EML ESC FAR FA/ GPH INSE MTW MOTR MMAG NRR NESF NMCN NSF OTMP OBD SAVE SCS STVG SNX SYS TMG TGL VLS VOG WYN
5 FTSE equities to add to your portfolio in October.
Macros: Indices and Markets
Calnex Solutions has today confirmed that the strong levels of customer spend experienced during H1/21 have continued into H2/21. Consequently, with FY21E revenue and profitability both anticipated to be ahead of market expectations, we have upgraded our FY21E revenue and adjusted PBT forecasts by 12.6% and 18.9% to £17.3m and £5.1m, respectively. Calnex has firmly established a trusted reputation worldwide, launching multiple first to market telecoms and network testing solutions. The exponenti
Calnex Solutions has announced record results for FY21 following customer orders up across all product types and within all regions, with FY21 revenue up 31% to £18.0m and adjusted PBT up 43% to £5.1m. Calnex has firmly established a trusted reputation worldwide, launching multiple first to market telecoms and network testing solutions. Calnex continues to accelerate its investment in R&D and expand its product roadmap, adding increased engineering, sales and customer support capacity in order t
Disappointing Q1 in terms of revenue, however offset in part by a solid EBITDA. Be cautious however that BT, like Orange, does not despair investors by postponing the stabilization of its revenues quarter after quarter. We maintain our opinion at reduce on the stock, however now with… a slight upside.
Companies: BT Group plc
The Networking & Cyber and Bio-medical solutions technology specialist has published interim results to end June this morning. These reflect the strong underlying progress being achieved in both Bio-Medical and Networking & Cyber divisions, whilst noting the sale earlier this year of the NGSoft IT Services business, which reduced revenues by c.$7.3m (Shore Capital Markets estimate) in the period, generating a profit on disposal of $13.0m and net cash proceeds before tax of c.$18.7m. Strong opera
Companies: BATM Advanced Communications Ltd.
CAP-XX Ltd* (CPX.L, 5.8p/£29.5m) Finals: Sales order book up more than 160% (29.09.21) | MTI Wireless Edge Ltd* (MWE.L, 70p/£62.0m) Contract win: MTI Summit secures multi-year customer agreement (30.09.21) | Mirada plc* (MIRA.L, 65p/£5.8m) Finals: Considerable pipeline of sales opportunities (29.09.21)
Companies: CPX MWE MIRA MBT
