Vodacom is a leading African communications group providing converged mobile communications and related services across South Africa, Tanzania, the Democratic Republic of the Congo (DRC), Lesotho, Mozambique, Ethiopia, Kenya (via Safaricom) and Egypt (via Vodafone Egypt).
Vodacom is the clear market leader in most of the countries in which it operates and remains well-positioned for continued competitiveness. The business is highly cash-generative, which gives it the ability to pay consistent and high dividends, and we believe that the group is well-positioned to withstand current macroeconomic headwinds.
Technically, the price is currently trading within a "value buying zone" (see the grey rectangle on the main chart). This refers to a price level or range at which a share has historically experienced significant buying activity.
The stock is trading above its 200-week simple moving average of ~R113. When the price of a share is above its 200-week, it is typically seen as an indicator of a long-term bullish trend.
Our bullish bias is also supported by the upward price momentum according to the Coppock curve. Additionally, the recent sideways trajectory of the On-balance Volume (OBV) indicator indicates that money remains in the share.
Share Information
| Share code | VOD |
|---|---|
| Industry | Telecommunication Services |
| Market Capital (ZAR) | 238.04 billion |
| One year total return | -12.07% |
| Return year-to-date | -3.98% |
| Current price (ZAR) | 114.56 |
| 52 Week high (ZAR) | 140.83 |
| 52 Week low (ZAR) | 106.78 |
| Financial year end | March |
| Closing paragraph | The price is above its 200-week simple moving average - a major psychological level. Several technical indicators further support a bullish trend. We expect moderate volatility in the share price. |
Consensus Expectations (Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (ZAR) | 9.48 | 9.95 | 10.98 | 12.15 |
| Growth (%) | 4.94 | 10.33 | 10.65 | |
| Dividend Per Share (ZAR) | 6.70 | 7.17 | 7.96 | 8.90 |
| Growth (%) | 7.07 | 10.98 | 11.73 | |
| Forward PE (times) | 11.52 | 10.44 | 9.43 | |
| Forward Dividend Yield (%) | 6.26 | 6.95 | 7.77 | |
| Closing paragraph | Growth is expected to take a step up from FY24 onward. The dividend yield is also attractive. | |||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position |
OMU - Profit Take (Close the Position) |
DCP - BUY (Continue to hold) |
INL - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 11.67 | 24.12 | 105 |
| Current | 13.07 | 25.79 | 111.95 |
| Movement | 12% | 6.9% | 6.6% |
| Summary text | We closed the position early to reduce overall portfolio exposure. |
The price action continues to exhibit early signs of a bullish divergence. The price remains just below its 200-day simple moving average.
Take profit target set at R29. Trailing stop-loss at R23.90. Time to exit: 4 September 2023. |
The price is noteworthy based on the RRG analysis, particularly due to its ability to stay above the 200-day simple moving average. Upside price momentum supports the idea.
Our profit target is R121, with a trailing stop-loss at R106. Note the upcoming the R4.23 dividend, with an ex-date of 16 August 2023. We have pushed out our time to exit to 30 October 2023. |
| Share Name and position |
APN - Buy (Continue to hold) |
DSY - BUY (Continue to hold) |
NPN - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 182.66 | 152.50 | 3 460.91 |
| Current | 192.96 | 155.47 | 3 455.00 |
| Movement | 5.6% | 1.9% | -0.2% |
| Summary text |
A developing symmetrical triangle pattern remains of interest. Remains above its 200-day simple moving average and upside price momentum is supportive of the trade idea.
Our profit target is R222, with a trailing stop-loss of R169. Exit the trade around 27 December 2024. |
A developing symmetrical triangle pattern remains of interest. The stock remains just above its 200-day simple moving average. Upside price momentum has halted, which is a concern.
Take profit target set at R182. Trailing stop-loss at R138. Time to exit: 27 May 2023. |
An inverse head and shoulders pattern remains of interest. The price remains above its 200-day simple moving average. Upside price momentum is supportive.
Take profit target set at R4 100. Trailing stop-loss at R3 204. Time to exit: 23 October 2023. |
