MTN Group share price: FY20 results update and trading view
In the below article we summarize FY20 results and dividend expectations from the MTN Group, as well as take a look at how the share price is reacting to the news.
The MTN Group Results Update & Dividend Suspension
The MTN Group Ltd has surprised markets in its results release which saw the company suspending its full year dividend, despite having managed to increase FY20 earnings over the period. The Group is instead now focused on deleveraging the holding company and has in turn reduced net debt by R12bn to R43bn. MTN has however said that it will look to returning cash to share holders in the form of either a special dividend or share repurchase, but that is only after the release of FY21 results.
A summary of the salient features from the FY20 results release are as follows:
- Adjusted Headline earnings per share +52%
- FY20 Dividend suspended
- FY21 Dividend of 260c per share expected
- Group added 29m subscribers in FY20
The MTN Group: technical analysis
The share price of MTN has reversed from recent highs and overbought territory, with negative divergence having been an extra warning signal for the move underway. The price gap lower (shaded grey) shows an aggressive short term momentum to the move lower.
7000 becomes the initial support target from the move. Traders who are short might consider using a close above gap resistance at 7540 as a stop loss indication. Should the 7000 support level break (confirmed with a close) trend line support at roughly 6500 becomes a further downside target.
In Summary
- MTN Group full year earnings (on an adjusted basis) have increased by more than 50%
- The group has suspended its dividend for 2020 as it looks to reduce debt for the holding company
- The dividend or a share repurchase is expected to be reinstated after the release of 2021 results
- The share price of MTN has reacted negatively to the news of a dividend suspension
- The retracements from overbought territory now sees 7000 as the next downside support target from the move
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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