After the huge spike we saw on the back of their results, we are seeing MTN trade back down below R130.00. What is significant about this “pull-back” is that it takes MTN’s price back into it’s previous (and established) trading range. And I’m getting ready to pull the trigger…
Even more significant about the trading range, is the bottom band. This has acted as extremely strong support since August last year. The price has consistently bounced off this level numerous times and this is the level I am looking to buy.
Source: IRESS Viewpoint
On the fundamental side of things, there is a strong possibility that the tower company known as IHS Towers of which MTN owns 29% is planning a listing (IPO) in the US. If the valuation is favourable, there is a high probability that MTN will sell their stake and realise a profit from an asset which has ALWAYS been earmarked as an “asset for sale”.
As MTN recovers from that massive Nigerian regulatory fine and strives to reduce their debt, it makes sense that IHS Towers will be sold and thus strengthen MTNs cash flows. If the valuations are correct, MTN’s stake could be worth as much as R27 Billion.
At their results presentation, MTN announced that their full year dividend would remain unchanged at R7.00. This means their next dividend will be R3.60 and is due to trade ex-dividend on 3 April. I am hoping to capture this dividend as part of the trade.
So here’s the plan
I am hoping to get my SMART trading copy traders in the MTN (CFD) long (buy) trade near the bottom band at 121.00/122.00.
Profit to target the upper band at R130.00 as a first target.
Stop loss will be a breach of support with some breathing room R117.00