Earnings momentum accelerated + FY profit guidance was lifted
MTEL posted stronger than expected results across the board, again. As a result of far better results than
originally assumed, management updated its profit guidance and changed the wording from “moderate
growth” to “double digit growth” - 23H1/22H1 13% Y-o-Y - but please note earnings momentum just
started in Q2. We believe net profit of HUF 80 bn could be achieved (H1 reported net profit @ HUF 33bn;
Q2 @ HUF 22bn) and along with the shareholder remuneration of HUF 56 per share (assuming 70% payout
ratio) or 12.6% yield ( + 500 bps premium above HU 10yr vs avg. of 250bps).
All in all, our playbook on seems to materialize, MTEL earnings has started to accelerate. The second leg of
earning’s jump will come from the cost savings on the energy cost, but it would arrive next year. Until then
we recommend to load up with the name, because the three digit EPS is really close. MTEL trades at 5.5x
P/E’23 (assuming HUF EPS 80).
Magyar Telekom is engaged in the providing fixed line and mobile telecommunication services for public and business customers. Co. provides voice and non-voice (SMS, MMS, internet, data and content provision) within mobile services; voice, data, internet and TV services within fixed line services. In addition, Co. sells equipment needed for using fixed line and mobile services (telephones, tablets, notebooks, TV sets etc.).
Concorde Securities Ltd. is Hungary’s leading independent company engaged in investment banking activities. It provides its clients with integrated financial services, including securities trading, research, corporate financing advisory, capital market transactions, wealth management and investment advisory. The operational management of the company is the responsibility of the CEO, while the owners/managers (who control one-third of the company through their shares and options) are in charge of its strategic governance. Concorde Securities Ltd. is a member of the Budapest, Frankfurt, Warsaw and Bucharest stock exchanges, as well as of the Hungarian Association of Investment Service Providers.
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