WAY TOO EXPENSIVE
SPECIALISED RETAILER CELCOM, which vends airtime, owns Vodacom retail franchise stores and is slowly diversifying up Africa, listed on the AltX on 22 September 2006 and raised capital in a private placement at 100c/share.
It currently trades at 34c/share, with recently reported headline earnings per share to June – restated for SAICA Circular 08/07, which includes the amortisation of intangibles – of 138c, putting it on a historic multiple of 24,6 times. Previously reported HEPS for the 15 months to June 2007 were 4,58c.
Off the new base Celcom’s HEPS grew at 18%, or 25% on an annualised basis. Revenues jumped 46% to just more than R1bn. But its already paper-thin earnings before interest, tax, depreciation and amortisation (EBITDA) margins of 1,78% last year shrunk to 1,24% this year.
• • • A play on the past few years of growth left in the SA mobile market, ongoing handset replacements plus growth in Africa as it rolls out this presence. Its Uganda acquisition should contribute positively next year. With cellphone operators wanting to own more of the customer Celcom could be a small nibble for a bigger operator at the right price.
Local market maturation. African acquisitions are always risky. Cited poor global economic conditions and challenging SA trading conditions as requiring conservative group budgets this year. Admits it needs to improve cost management, operational efficiencies and performance levels.