Vodacom Group (VDMCY) AI Stock Analysis

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Vodacom Group

(OTC:VDMCY)

75Outperform

Vodacom Group's overall stock score of 75 reflects a strong financial performance with efficient operations and profitability, balanced by moderate bullish technical indicators and a fair valuation. The earnings call highlighted growth opportunities, despite challenges from currency devaluations and strategic setbacks in South Africa. These factors contribute to a positive but cautious outlook.

Vodacom Group (VDMCY) vs. S&P 500 (SPY)

Market Cap

$12.31B

Dividend Yield3.37%

Average Volume (3M)1.41K

Price to Earnings (P/E)15.2

Beta (1Y)0.89

Revenue Growth7.08%

EPS Growth-19.34%

CountryUS

Employees7,642

SectorCommunication Services

Sector Strength77

IndustryTelecommunications Services

Share Statistics

EPS (TTM)0.41

Shares Outstanding2,077,841,300

10 Day Avg. Volume4,221

30 Day Avg. Volume1,407

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)2.02

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Vodacom Group Business Overview & Revenue Model

Company DescriptionVodacom Group Limited is a leading African communications company providing a wide range of services including mobile voice, messaging, data, and converged services to over 110 million customers. Operating primarily in South Africa, with additional operations in Tanzania, the Democratic Republic of the Congo, Mozambique, and Lesotho, Vodacom is a subsidiary of the British multinational telecommunications company Vodafone Group Plc. The company is headquartered in Johannesburg, South Africa, and is known for its robust network infrastructure and technological innovations in telecommunications.

How the Company Makes MoneyVodacom Group generates revenue through several key streams, primarily from its mobile operations which include voice services, data services, and messaging. The company charges customers on prepaid and contract bases, with a significant portion of revenue coming from data services as internet usage continues to grow. Additionally, Vodacom offers enterprise solutions, including mobile and fixed connectivity services, unified communications, and cloud services. The company also benefits from strategic partnerships with other telecommunications providers and through its M-Pesa financial services platform, which offers mobile money transfer and payment services, contributing significantly to its revenue in markets like Tanzania and Mozambique.

Vodacom Group Financial Statement Overview

Summary

Vodacom Group's financial performance is robust, with strong income statement metrics reflecting efficient operations and profitability. The balance sheet is well-structured, though increasing debt levels warrant attention. Cash flow analysis showcases excellent cash management, providing financial flexibility. Overall, the company is well-positioned in the telecommunications industry, with growth potential and operational efficiency balanced against manageable risks.

Income Statement

Positive

Vodacom Group shows strong profitability with a Gross Profit Margin of 61.68% and a Net Profit Margin of 10.82% in the latest annual report. The company experienced significant revenue growth over the previous year, indicating positive business expansion. EBIT and EBITDA margins stand at 23.47% and 39.22%, respectively, showcasing efficient operations. However, the variability in revenue figures across different years suggests potential volatility in revenue streams.

Balance Sheet

Positive

The company's Debt-to-Equity Ratio is 0.79, indicating a balanced leverage position. Return on Equity (ROE) is 17.56%, reflecting good profitability for shareholders. The Equity Ratio is 38.55%, suggesting a strong capital structure. While the company maintains a healthy balance sheet, a notable increase in total debt over the years could pose risk if not managed properly.

Cash Flow

Very Positive

Operating Cash Flow to Net Income Ratio stands at 3.01, highlighting robust cash-generating efficiency. The Free Cash Flow to Net Income Ratio is 1.64, indicating strong free cash flow generation relative to net income. The Free Cash Flow Growth Rate is significant, demonstrating effective cash management and growth potential. Overall, cash flow metrics are strong, supporting the company's financial flexibility.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
151.33B	150.59B	6.97B	6.88B	5.98B	6.12B
	Gross Profit
83.43B	82.76B	2.76B	2.81B	2.42B	2.52B
	EBIT
34.45B	35.34B	1.49B	1.66B	1.45B	1.58B
	EBITDA
55.32B	59.07B	44.61B	43.45B	43.09B	41.72B
	Net Income Common Stockholders
14.75B	16.29B	985.68M	1.16B	1.01B	1.08B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
6.62B	34.84B	1.30B	1.25B	1.50B	1.39B
	Total Assets
55.59B	240.61B	12.87B	12.18B	11.65B	10.65B
	Total Debt
0.00	73.48B	3.96B	3.59B	3.38B	2.94B
	Net Debt
-6.53B	49.77B	2.72B	2.38B	1.90B	1.64B
	Total Liabilities
34.38B	136.78B	7.38B	6.33B	5.84B	5.05B
	Stockholders Equity
20.80B	92.76B	4.84B	5.44B	5.38B	5.13B
Cash Flow		Free Cash Flow
25.29B	26.69B	1.22B	1.30B	1.24B	1.30B
	Operating Cash Flow
48.17B	49.01B	2.40B	2.23B	2.06B	2.24B
	Investing Cash Flow
-20.31B	-20.72B	-1.88B	-1.04B	-814.02M	-1.11B
	Financing Cash Flow
-23.69B	-25.70B	-375.41M	-1.09B	-1.20B	-878.35M

Vodacom Group Technical Analysis

Technical Analysis Sentiment

Positive

Last Price6.34

Price Trends

50DMA

6.42

Negative

100DMA

6.03

Positive

200DMA

5.89

Positive

Market Momentum

MACD

0.08

Negative

RSI

64.32

Neutral

STOCH

88.70

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VDMCY, the sentiment is Positive. The current price of 6.34 is below the 20-day moving average (MA) of 6.47, below the 50-day MA of 6.42, and above the 200-day MA of 5.89, indicating a neutral trend. The MACD of 0.08 indicates Negative momentum. The RSI at 64.32 is Neutral, neither overbought nor oversold. The STOCH value of 88.70 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VDMCY.

Vodacom Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TIMB	82 Outperform	$7.04B	11.95	12.04%	3.13%	-0.91%	1.51%
VIV	77 Outperform	$13.98B	13.59	7.95%	2.86%	-0.47%	1.69%
VDMCY	75 Outperform	$12.31B	15.17	16.73%	3.37%	7.08%	-19.34%
TLK	73 Outperform	$13.86B	9.68	16.61%	5.92%	-2.99%	-7.36%
VOD	71 Outperform	$21.33B	8.24	4.31%	7.97%	-24.84%	-74.77%
SKM	69 Neutral	$8.35B	8.99	11.19%	5.38%	-2.34%	12.31%
Sector *	58 Neutral	$25.97B	3.12	-10.67%	4.37%	2.16%	-43.01%

* Communication Services Sector Average

Performance Comparison

VDMCY

Vodacom Group

6.34

1.70

36.64%

TLK

PT Telekomunikasi Indonesia Tbk

14.30

-5.65

-28.32%

SKM

Sk Telecom

22.19

2.15

10.73%

VIV

Telefonica Brasil

8.58

-0.31

-3.49%

TIMB

TIM

14.82

-0.52

-3.39%

VOD

Vodafone

8.73

1.05

13.67%

Vodacom Group Earnings Call Summary

Earnings Call Date: Nov 11, 2024 | % Change Since: 8.75% | Next Earnings Date: May 19, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with strong growth in financial services and data revenue, especially in Egypt, offset by significant challenges from currency devaluations impacting earnings, and setbacks in the fiber strategy in South Africa. Despite these challenges, the company is optimistic about future growth potential.

Highlights

Significant Customer Base Growth

Vodacom now connects 206 million customers and provides financial services to 83 million customers, marking significant milestones in the company's history.

Strong Financial Services Growth

Financial Services business was up 7.8% in rands or 17.6% on a normalized basis, contributing 11.4% to group service revenue.

Expansion in 4G Coverage

Vodacom added 1,133 new 4G sites across the group in the last six months, aiming to close the digital divide.

Impressive Performance in Egypt

Local currency revenue growth in Egypt was 44.1%, with financial services growing 94.4%. Egypt's EBITDA margins improved to 43.4%.

Data Revenue Growth

Prepaid data makes up 28.2% of service revenue and grew 21.8% in the period.

Lowlights

Currency Devaluation Impact

Earnings were significantly impacted by currency devaluations in Egypt and Ethiopia, with HEPS declining 19.4% to 353 cents.

International Business EBITDA Decline

International business EBITDA was ZAR4.3 billion and declined by 20% due to foreign exchange pressures and one-off costs in the DRC.

Disappointment in South Africa Fiber Deal

The MAZIV transaction was prohibited by the competition tribunal, impacting Vodacom's fiber strategy in South Africa.

Prepaid Voice Revenue Decline

Prepaid voice revenue declined by 3.4% in the period, indicating a challenge in maintaining this revenue stream.

Tax Rate Increase

The effective tax rate was 38.4%, significantly above the statutory rate of 27%, due to various one-off factors and non-deductible finance costs.

Company Guidance

In the latest call, Vodacom Group outlined strong commercial momentum despite challenging currency headwinds, targeting high-single-digit growth in service revenue and EBITDA over the medium term. The group served 206 million customers, with 83 million using financial services, and aimed to expand this to 120 million by 2030. Financial services contributed 11.4% to group service revenue, with a 17.6% underlying growth trend, supported by over $421 billion in annual mobile money transactions. Additionally, Vodacom focused on digital inclusion, adding 1,133 new 4G sites and targeting the connection of 300 million customers. The group's financial results were impacted by currency devaluations in Egypt and Ethiopia, leading to a 19.4% decline in HEPS to 353 cents, although normalized group service revenue grew by 9.9%. Capital intensity was maintained within a 13% to 14.5% revenue range, with the group spending ZAR8.8 billion so far. The Board declared an interim dividend of 285 cents per share. Despite challenges, Vodacom emphasized its commitment to connectivity, financial inclusion, and sustainable growth across its African markets.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.