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Analysis of Safaricom FY 2011 results
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muganda
#1 Posted : Wednesday, May 18, 2011 4:47:13 PM
Rank: Elder

Joined: 9/15/2006
Posts: 3,907
Okay the detailed file is in so what do you think

Full Year 2011 Results Presentation

Press Release Commentary March 2011

Barrywhite wrote:
Growth in;
o Active customers at year end by 8.8% to 17.2m compared to 31 March 2010
o Revenue by 12.9% to Kshs94.8bn
o Data revenue from 19.6% to 28.0% of ongoing revenue
o Mobile and fixed data revenue by 80.3% to Kshs5.4bn
o Number of fixed data connections up by 466.0% to 4,483
o Mobile data customers up 85.6% to 4.9mn
o M-PESA revenue by 56.0% to Kshs11.8bn
o M-PESA registered customers to 13.8m or 81.0% of our customer base
 EBITDA of Kshs35.7bn and a margin of 37.7%
 EPS of Kshs0.333 per share
 Ksh4.5bn free cash flow
 Successful issue of Kshs4.5bn domestic medium term notes (final tranche)
 Directors propose payment of a dividend of Kshs0.20 per share.
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muganda
#2 Posted : Wednesday, May 18, 2011 4:55:07 PM
Rank: Elder

Joined: 9/15/2006
Posts: 3,907
I note a 13% increase in revenue despite price wars meaning Safaricom is making more from MPESA customers (grew 45%)

Churn (people leaving) has grown slightly by 3%


But what would justify the 25.3% increase in operating expenses, or the 23.2% increase in administrative expenses? Is this the cuplrit that led to...

--12.9% decline in profit before tax
--12.9% erosion of earnings per share


At a P/E of 11.5 price direction - stagnant very slight movement
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the deal
#3 Posted : Wednesday, May 18, 2011 5:01:44 PM
Rank: Elder

Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
Full and Comprehensive analysis here http://contrarianinvestingkenya.blogspot.com/ later in the evening.
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Barrywhite
#4 Posted : Wednesday, May 18, 2011 5:10:34 PM
Rank: Member

Joined: 12/2/2009
Posts: 286
Location: Nairobi

Its clear the operating expenses are the culprit; voice revenue after such a brutal voice tariff war, went down only 1.7%. Clearly after tariff reduction, voice volumes doubled to achieve nearly the same revenue.
The laudable is more often than not rendered laughable by overclaim
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muganda
#5 Posted : Wednesday, May 18, 2011 5:39:16 PM
Rank: Elder

Joined: 9/15/2006
Posts: 3,907
@Barrywhite, well said, minutes of use per subscriber increased from 60.6 to 96 minutes which represents 60% increase. Tariff cut was 50% though only affected second half of period.

„Skiza‟, the caller ringback tone service has continued to grow in popularity and currently has 3.9 million users subscribed to it, a 22% penetration of our subscriber base in just 2 years!


I see 1,140 3G stations and 186 Wimax. In a telecom infrastructure game, it will take some time for Airtel to replicate.


Difficult not to appreciate efforts to diversify revenue from 76% voice to 67% voice. Net profit margin down from 18% to 13.9%. Why lie, last year was an easier year.
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mlennyma
#6 Posted : Wednesday, May 18, 2011 5:42:43 PM
Rank: Elder

Joined: 7/21/2010
Posts: 6,194
Location: nairobi
I think the recent re-organisation which was made to make the operations leaner was not factored here so going forward this cost cuts will make the cake more fat.
"Don't let the fear of losing be greater than the excitement of winning."
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youcan'tstopusnow
#7 Posted : Wednesday, May 18, 2011 5:44:10 PM
Rank: Chief

Joined: 3/24/2010
Posts: 6,779
Location: Black Africa
Barrywhite wrote:

Its clear the operating expenses are the culprit; voice revenue after such a brutal voice tariff war, went down only 1.7%. Clearly after tariff reduction, voice volumes doubled to achieve nearly the same revenue.

For how long were calls at 3 bob during the whole year?
GOD BLESS YOUR LIFE
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youcan'tstopusnow
#8 Posted : Wednesday, May 18, 2011 5:46:19 PM
Rank: Chief

Joined: 3/24/2010
Posts: 6,779
Location: Black Africa
The biggest plus in this results is the reduction of contribution of Voice from 76% to 67%
GOD BLESS YOUR LIFE
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hisah
#9 Posted : Wednesday, May 18, 2011 6:22:07 PM
Rank: Chief

Joined: 8/4/2010
Posts: 8,977
hisah wrote:
If the PBT is down 2 - 4B that will be a stellar result. At 6B down I get concerned... If revenues are above 78B that's stellar too.
I saw a bloomberg article suggesting revenues above 90B. That will be a shocker with kamikaze price wars!? Such an outcome will get people asking for lower rates smile


Hmmm... This elephant indeed got revenues past 90B up to 95B with the kamikaze price wars! Well above my expectations. I never thought the data curve was going parabolic that much...! AK is in trouble going by the growth of Safcom's fixed data revenues. AK clients (corporate) must have vuka'd to this fixed data service.
The PBT also down 2.6B well in line with my estimate.
The most stark fact is voice revenues in H2 only took a slight dent even with kamikaze price wars! That is going to get Airtel back to the drawing board asap. The Airtel board won't have nice words for the CEO and the strategy team.

Overall the results are commendable. At 3.90 the P/E is 11.8. So if the historic P/E is reversed to expensive levels in a bearish NSE this will be the targets.

A P/E of 14 = 4.60 (EPS - 0.33 x 14).
A P/E of 15 = 4.95.
A P/E of 16 = 5.25.

To be realistic, anything above 5/- will be sold.

My buy targets are now reversed down to 2.60 - 3.30 where the historic P/E will be between 8 and 10. At these levels most of the mboyz and long timers (term) will be busy buying bucket loads since the dividend yield would be 76% and 60% with the share price at 2.60 and 3.30 respectively.
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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VituVingiSana
#10 Posted : Wednesday, May 18, 2011 6:33:23 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,356
Location: Nairobi
hisah wrote:
My buy targets are now reversed down to 2.60 - 3.30 where the historic P/E will be between 8 and 10. At these levels most of the mboyz and long timers (term) will be busy buying bucket loads since the dividend yield would be 76% and 60% with the share price at 2.60 and 3.30 respectively.

Dividend yields are much lower than the 76% & 60% you are quoting.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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