Stockbroker Sees Upward Potential For BTCL Shares
Mbongeni Mguni | Monday August 13, 2018 12:56
Since its listing in April 2016 at P1.15, BTCL’s share price has been on a rollercoaster, plunging at one point to 81 thebe and peaking at P1.85. Analysts have attributed the swings to the dominance of retail investors on BTCL’s share registry, who are associated with impulse trading behaviour.
Due to the heavy presence of retail investors, BTCL’s performance has become the subject of speculation on social media, further fuelling impulse trading, a trend the corporation’s management has sought to discourage through greater investor education.
Stockbrokers Botswana researchers, in a note released this week, said while the counter was trending low at presently, BTCL had considerable upside potential. The researchers issued a ‘BUY’ recommendation on BTCL.
“The telecom giant is making significant investments in fixed broadband and mobile broadband infrastructure to capitalise on the increased demand and consumption of broadband internet services, and is currently carrying out a growth and transformation focused strategy to remain competitive,” Stockbrokers Botswana researchers said.
The researchers forecast pre-tax profits of P278.3 million for BTCL’s year ending March 31, 2019, which would represent a six percent increase on the level attained in the immediate past financial year.
According to Stockbrokers Botswana, BTCL’s upside comes from its strength in fixed broadband and mobile, where the possibility of mobile number portability would benefit the group’s subsidiary, beMOBILE.
“The expected improvement in the macroeconomic environment should see a recovery in ICT spend from government and businesses.
“Consumption pattern shifts to increasing use of data as opposed to voice and SMS are what BTCL’s continued investments in LTE infrastructure are based on, as the company looks to further capitalise on consumer’s use of mobile broadband,” the note reads.
Stockbrokers Botswana researchers, however, cautioned that the telecommunication group’s ability to reach its potential share price could be limited by the structure of its shareholding.
“BTCL is trading at a steep discount to the market and offers a far higher yield, offering significant value to investors,” the researchers said.
“The shareholder structure of BTCL poses a significant risk that could limit the potential of the counter in reaching our target price.”