EFG-Hermes issued a report on Global Telecom Holding (GTH), maintaining its Buy recommendation on the stock.
“Having cleaned up the balance sheet in 2013, and after a resolution of the Djezzy dispute on terms we deem overall favourable to GTH shareholders’ – despite some reservations – we expect GTH to pay its first dividend since 2009 for FY2015 (xx% yield). This is good news for investors as we believe it improves total shareholder return (TSR) after accounting for value crystallization of the Algerian asset,” said EFG.
It added that GTH’s1Q2014 results were broadly in line with its estimates at the operational level, while earnings were back in the positive zone at USD38 million versus our estimate of USD17 million, in line with its expected direction.
“Overall we do not see any major surprises in the results, with the exception of Djezzy’s weaker-than-expected performance and a notably lower-than-expected group capex figure,” said the report issuer.
EFG also said, with the 2013 balance sheet clean-up behind us and the Djezzy dispute resolved, it believes GTH is on track to deliver positive earnings in 2014. EFG forecasts an optimistic earnings figure of USD229 million for 2014, and believe GTH could start paying dividends in 2015.