SCOM | Safaricom HY24 Earnings Note

Safaricom PLC HY’24 PAT declined 10.06% y/y to KES 27.19Bn driven by a 21.89% increase in operating expenses and a 142.86% jump in finance costs resulting from the continued depreciation of the Kenyan shilling.

Revenues increased 7.29% y/y to KES 164.62Bn which included KES 2.89Bn in revenue from Safaricom Ethiopia. M-Pesa revenue growth accelerated 750bps to 16.49% to KES 66.23Bn driven by increased usage and resumption of bank-to-wallet and wallet-to-bank charges. Voice revenue growth was relatively challenged, posting a 1.94% decline to KES 39.12Bn resulting, in part, from the downward revision of Mobile Termination Rates.

Earnings per Share (EPS) increased 12.50% to KES 0.90 from KES 0.80 in HY’23. The board did not recommend an interim dividend for the period given the continuous capital injection to Safaricom Ethiopia.

Valuation: At the current market price of KES 13.30, the stock is trading at a reasonable valuation of 8.06x P/E compared to frontier peer average of 13.52x. Our preference for Safaricom remains strong given anticipated growth of M-Pesa and Mobile Data and the ongoing expansion in the Ethiopian market. We maintain a BUY recommendation with a target price of KES 23.71 representing a 78.27% upside.

 

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AIB-AXYS Africa Ltd is the fusion of two established companies; AIB Capital Limited and Apex Africa Capital Limited, both with over 25 years of experience in the Securities market. With the solid reputation and experience of the professional teams, we leverage talent and networks to better service businesses and investors looking to capitalize on the African growth story, and its vibrant financial sector.
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