TPG share price: Why UBS remains bullish following Teoh’s departure

‘While today's share price movement reflects this, we see this as an opportunity to reiterate our Buy recommendation.’

Teoh’s Legacy

David Teoh founded TPG (Total Peripherals Group) in 1986 with his wife Vicky. It started as a computer retailer. A series of smart acquisitions would turn it into the third largest telco in Australia. All of this has resulted in the businessman being worth approximately USD$2 billion.

According to a 2013 Forbes profile of Teoh:

‘Vicky and their four sons have launched more than a dozen startups. They've also started a property investment company.’

The hustle is real.

In 2020, all these deals culminated in TPG merging with Vodafone. The ACCC opposed to deal but was overruled in federal court. The new company was called TPG Telecom.

Then the man who led this relentless flurry of deals last week decided to step down.

Thanking his shareholders for their support and lauding the business acumen on the man who was set to take over his role, Mr Canning Fok, David Teoh said:

‘Now is the right time for me to step aside and pursue other interests

Thank you for your support over the years, and I hope that you will continue to support the company, its new Chair and the entire TPG Telecom team.'

UBS

Despite lamenting the loss of Teoh for both the industry and the company, analysts from UBS said that it is unlikely to impact the company’s mid-term strategy. The investment bank reiterated its Buy rating and 12-month price target of $7.50 per share on TPG.

‘While today's share price movement reflects this, we see this as an opportunity to reiterate our Buy recommendation. While the timing of David Teoh's resignation may be somewhat of a surprise, his role was not involved with the day-to-day operations of TPG,’ said UBS.

The investment bank is forecasting TPG to deliver $5,505 million in revenues in FY21, earnings (EBIT) of $497 million and earnings per share (EPS) of $0.12 per share.

TPG share price ↓

Despite the optimism of UBS, the market has taken a decisively dour view, with the stock down since Teoh’s departure was announced. The TPG share price continued to trend lower on Monday, with the stock opening at $6.49 per share, before drifting to $6.32 per share by the afternoon – implying a market capitalisation a little below $12 billion.

At its 52-week peak, TPG traded at $9.70 per share.

The Telecommunication sector was down 0.70% by 3:16Pm.

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