Vodacom is a leading African communications group providing converged mobile communications and related services across South Africa, Tanzania, the Democratic Republic of the Congo (DRC), Lesotho, Mozambique, Ethiopia, Kenya (via Safaricom) and Egypt (via Vodafone Egypt).
Vodacom is a clear market leader in South Africa and remains well-positioned for continued competitiveness. The business is highly cash-generative, which gives it the ability to pay consistent and high dividends, and we believe that the group is well-positioned to withstand the current volatile trading environment.
Technically a price that seems to be forming a base, makes the share attractive as an investment option.
This means that the share price is consolidating and moving within a specific range, which typically occurs after a significant price movement in a specific direction. During this phase investors try to establish equilibrium in the share, and the price begins to form a support level at the lower end of the range. Investors closely monitor the price to identify a breakout of the consolidation range. Bear in mind that the base-building phase can take some time to develop, and it is not always a clear signal for a price breakout or reversal.
The share is also trading at the lower end of an upward sloping linear regression channel pattern (see the insert). This could point to a short-term dip in the price, presenting a buying opportunity and supportive of mean reversion.
The share is also trading at the lower end of an upward sloping linear regression channel pattern (see the insert). This could point to a short-term dip in the price, presenting a buying opportunity and supportive of mean reversion.
Share Information
| Share code | VOD |
|---|---|
| Industry | Telecommunication Services |
| Market capatalisation (ZAr) | 254.91 billion |
| One year total return | -13.43% |
| Return year-to-date | -0.02% |
| Current price(ZAr) | 122.68 |
| 52 weeek high(ZAr) | 157.00 |
| 52 week low(ZAr) | 115.62 |
| Financial year end | March |
| Closing paragraph | The price dipped below its 200-day simple moving average - a major psychological level. We expect moderate to high volatility in the share price. |
Consensus Expectations (Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (ZAr) | 9.84 | 9.18 | 10.23 | 11.10 |
| Growth (%) | -6.67 | 11.37 | 8.54 | |
| Dividend Per Share (ZAr) | 8.30 | 6.86 | 7.60 | 8.18 |
| Growth (%) | -17.41 | 10.85 | 7.61 | |
| Forward PE (times) | 13.36 | 11.99 | 11.05 | |
| Forward Dividend Yield (%) | 5.59 | 6.19 | 6.67 | |
| Closing paragraph | Growth is expected to stabilise from FY24 onward. The dividend yield is also attractive. | |||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and position |
TFG - BUY (Close the position) |
AMS - BUY (Continue to hold) |
LHC - BUY (Continue to Hold) |
|---|---|---|---|
| Entry | 83.54 | 1 003.84 | 19.30 |
| Current | 94.85 | 1 101.34 | 20.45 |
| Movement | 13.5% | 9.7% | 6.0% |
| Summary text |
The share price pulled back from an oversold scenario but remains below its 200-day simple moving average.
Our take profit target is set at R132, with a trailing stop-loss at R76.50. Time exit: 8 July 2024. |
Recently corrected from the lower range of the linear regression channel pattern. The price remains below its 200-day simple moving average but is approaching it.
Take profit target set at R1 280, with a trailing stop-loss at R991.10. Time exit: 18 September 2023. |
The price is worth monitoring as it is still near a major support level. The share is trading above its 200-day simple moving average.
Take profit target set at R22.20, with a trailing stop-loss at R19.20. Time exit: 26 June 2023. |
| Share Name and position |
BAW - BUY (Continue to Hold) |
MNP - BUY (Continue to hold) |
PRX - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 85.56 | 284.46 | 1 387.97 |
| Current | 88.33 | 287.51 | 1 371.62 |
| Movement | 3.2% | 1.1% | -1.2% |
| Summary text |
The share price is testing its 200-day simple moving average. Upside price momentum supports the predominant trend.
Our take profit target remains at R104, with a trailing stop-loss at R80.70. Time exit: 3 July 2023. |
The price remains close to key support and its 200-day simple moving average. The bullish trend is reinforced by a decline in negative price momentum.
Take profit target set at R328, with a trailing stop-loss at R269. Time exit: 22 May 2023. |
The share's ability to maintain its position above critical support levels makes it a compelling investment opportunity. The price remains above its 200-day simple moving average.
Take profit target is R1 606, with a trailing stop-loss at R1 295. Time exit: 15 August 2023. |
