ONATEL Report updated (June 2021)
At current price of XOF 3 110 (EV/EBIDTA of 3.32x compared with 4.9x for its peers), ONATEL remains undervalued when compared to its peers, hence there is scope for expansion in valuation multiples. We use EV/EBITDA method as our valuation ratio, as telecom companies have a strong history of cash generation, while EBITDA tends to be a good proxy for operating cash flow and can mitigate the impact from differences in depreciation cycles, capex cycles, and capital structures. In addition, the current market price is lower than the fair value we forecast over the next two years. With the target price of 4 000 based on 2021 expected results, we recommend a BUY on ONATEL.
Hudson is an integrated securities firm, member of the West Africa regional stock exchange (BRVM) that offers a large array of financial services including brokerage, custody, sell-side research, investment management, investment banking and advisory, issuer services. Hudson's African and International client base includes governments, financial institutions, high net worth individuals, and corporate from various industries.
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