Record quarterly profit, but focus on adjusted profit, its even better!

MTEL’s Q3 EBITDA and net profit arrived to HUF 22.9 bn (+34% y-o-y) and HUF 80.4 bn (+23% y-o-y) vs. the consensus of HUF 22.8 bn and HUF 79 bn respectively. Even though EBITDA dynamic was extremely strong, this growth did entirely materialize on the bottom-line because of the revaluation losses MTEL suffered in financial derivatives in an extent of HUF 7bn. We would like to stress that this amount is not realized losses and is expected to reverse. Adjusted profit which cleans profit from that non-cash items arrived to HUF 30 bn (+49% y-o-y; 9M +48% y-o-y), this is the best earnings proxy we think to look at.

• Key positives:

1. New quarterly record profit even in reported profit terms, not to mention adjusted profit.
2. Because of strong EBITDA growth net debt to EBITDA KPI moderated to 1.7x
3. 9M EBITDA growth (16% y-o-y) exceeded mgmt. FY EBITDA growth expectation of 10 – 15%
4. MTEL might offer 66.5 per share remuneration if Q4 will be as strong as Q3

 

• Key negatives:
  1. RGU growth rate also probably peaked Q3: +98k; Q2:+122k