Despite a 43% rise in its share price since May, when the group reached its lowest point, Irnest Kaplan, MD of Kaplan Equity Analysts believes there are still too many uncertainties in Telkom to start getting carried away.<\/p>\n
Shares in Telkom have lifted R5.17 since it reached an all-time low of R11.93 on 6 May, to a closing price of R17.10 on Wednesday (3 July).<\/p>\n
Over a year period, Telkom is still off 7.47% or R1.38, but is up a fraction (1%) since January, giving the group a market cap of R8.91 billion.<\/p>\n
By 10h00 in early moring trade on the JSE on Thursday (4 July), Telkom shares were off 10c to R17.00.<\/p>\n
Last month, Telkom reported a 73.2% decline in headline earnings per share to 87.0 cents in results for the year ended March 2013.<\/p>\n
Group operating revenue decreased by 1.7% to R32.501 billion (2012: R33.079 billion).<\/p>\n
The decrease, Telkom said was mainly due to lower fixed-line voice revenue, partially offset by an increase in mobile and data revenue.<\/p>\n
Telkom\u2019s board also took the decision to impair the carrying value of the assets of the group by R12 billion for the year ended 31 March 2013, giving the group a net asset value is R34 per share.<\/p>\n
\u201cIt’s very difficult to pin down Telkom\u2019s climb to one specific\u00a0 reason,\u201d Kaplan told BusinessTech. \u201cIs Telkom the company it was six months ago? Yes,\u201d he said.<\/p>\n
\u201cIt is fair to say that Telkom\u2019s share has been largely undervalued for some time. Arguably, it\u2019s dropped too much,\u201d the analyst opined.<\/p>\n
Kaplan said that the company\u2019s share price needs a catalyst to change it. He pointed to a recent change in the board and top management of the company.<\/p>\n
\u201cWe started seeing changes in the board, with a bit more acumen than before. There was the write down of the network, which would ordinarily be seen as a negative, but in Telkom\u2019s case, it symbolises a maturity and a forward looking view from management. It\u2019s a sign that management is being objective, and that can be viewed as a good thing.<\/p>\n
He said that, while the group\u2019s income statement didn\u2019t make for particularly good reading, \u201cwhen one looks at the operating cash flow, it was about R1.5 billion higher than before\u201d.<\/p>\n
Telkom reported cash flows from operating activities of R7.5 billion, from R5.9 billion in 2012.<\/p>\n
Kaplan said that the appointment of a CEO recently, did remove the uncertainty that surrounded the group when it has appeared to be in limbo for some time.<\/p>\n
In March, Telkom appointed\u00a0Sipho Maseko<\/a>\u00a0as its new group chief executive, and Brian Armstrong as its chief operating officer. The group also appointed new board members in December.<\/p>\n Kaplan noted that there has been a lot of interference in Telkom by government, the group\u2019s main shareholder, \u201cwith its strategy certainly different from that of which shareholders would want from the group”.<\/p>\n He said this difference would make it a difficult company to manage. \u201cIf they (management and the board) can manage this relationship, it would be a big win”.<\/p>\n Kaplan also said that there are certain elements in Telkom which are doing well, indicating that \u201cthere is hope.\u201d<\/p>\n However, the analyst said he didn\u2019t think that the company would climb to much more in a short period of time.<\/p>\n \u201cIt\u2019s not going to be a darling,\u201d Kaplan said. \u201cThere are just too many unknowns, it\u2019s still difficult to call. There needs to be more clarity before one can take a long term view on Telkom.”<\/p>\n Other analysts have been less than complimentary of Telkom in recent times.<\/p>\n Speaking on CNBC Africa, post-Telkom\u2019s results, Gryphon Asset Management portfolio manager, Reuben Beelders<\/a>\u00a0said:\u00a0\u201cI think investors are increasingly just tired of seeing a re-run of the same movie. My personal opinion, I would like to see some delivery before I buy into the stock.\u201d<\/p>\n \u201cThe only thing that\u2019s really in favour of the stock right now is that it\u2019s trading at probably a 50% discount to the NAV, which management now claim it to be R34. It\u2019s probably trading at a massive discount to that.\u201d<\/p>\n Telkom a re-run of the same movie: Analyst<\/strong><\/a><\/p>\n Telkom earnings sink\u00a0<\/strong><\/a><\/p>\n Sipho Maseko the new Telkom CEO<\/strong><\/a><\/p>\n Telkom impairs R12 billion in assets<\/strong><\/a><\/p>\n Telkom appoints head of strategy<\/strong><\/a><\/p>\nMore on Telkom<\/h3>\n