Safaricom share hits six-month high ahead of results
At the Sh3.30 price level, Safaricom’s share has gained 10 per cent since November, when it traded at Sh3 just before release of the first-half performance. Photo/FILE
Safaricom’s share price has hit a six-month high driven by investor speculation ahead of the company’s end-year results.
The telecommunications operator’s year ends on March 31, and it is expected to announce its results early this month.
At the Sh3.30 price level, Safaricom’s share has gained 10 per cent since November, when it traded at Sh3 just before release of the first-half performance.
A research note on the firm done by Standard Investment Bank (SIB) has predicted that Safaricom is on track to cross the Sh100 billion annual revenue mark.
Eric Musau, a research analyst at SIB, said investors are warming up to the share based on expectations that the company will have a better second half boosted by last year’s 30 per cent increase in calling rates.
“There is a lot of speculation and it is probably valid,” said Mr Musau.
Should Safaricom generate revenues above Sh100 billion, it will become the second listed company to achieve the financial feat, after KenolKobil which grossed Sh222.4 billion in sales last year and Sh101.6 billion in 2010.
Over the same period, Safaricom reported turnover of Sh94.8 billion and Sh84 billion respectively.
“Foreigners will maintain support on Safaricom on position-taking ahead of full year result,” said a market report by Sterling Capital.
The strengthening of the shilling in the last two months of the year and better cost management are also expected to lift overall performance.
“The currency has pulled back 10 per cent from the Sh100 level in September but depending on the hedging adopted and maturity dates for the transactions, we could see some of the losses lessened by financial year 2012,” says the Sterling Capital report.
Analysts are, however, reluctant to predict Safaricom’s net earnings, citing mixed reports of changes in market share, average calling times and the average revenue per user on the telco’s network.
Mr Musau said expectations are that Safaricom will take a “small dip” in its net profits but added that it would have been worse were there no reversals in factors such as forex exchange rates and tariff increases.
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