MTN Group Limited (JSE: MTN) started the week on a weak footing, with the share price dipping over 0.84% in the morning session, helping the share reach a decline of over 5.3% for the month. However, beneath the surface, whispers of a potential rebound are brewing, fuelled by a combination of positive fundamentals and recent share awards to top executives.
While not earth-shattering, MTN’s EPS has steadily climbed by 7.1% over the past three years, a testament to the company’s underlying resilience. While year-on-year service revenue soared 14.2%, driven by strong performances in Nigeria and Ghana, the third quarter witnessed a slowdown to 12.3%, impacted by the conflict in Sudan. Subscriber numbers edged up marginally, hampered by regulatory issues in key markets. MTN’s fintech arm also continues to shine, with transaction volumes up a staggering 33.9% in the last quarter. This segment holds immense potential for future growth, particularly in Africa’s burgeoning mobile money space.
However, the recent share award to top executives, while raising eyebrows, highlights management’s confidence in the company’s long-term prospects. This insider buying could be interpreted as a positive signal for potential investors and is likely to attract further investor attention.
Technical
MTN currently trades sideways at 11,708 cents, nestled between the 50.00% and 38.20% Fibonacci retracement level just above the 100-SMA.
Price sits above the 50-SMA (blue line) and 100-SMA (orange line) but below the 200-SMA (red line), suggesting a potential tug-of-war between bulls and bears. Slightly downward-sloping at 52.20, indicating a potential for further consolidation before a breakout.
With the price action recently finding significant support on the 100-SMA, a continued push above is likely, with a successful break above the 50% Fibonacci retracement level likely to bring the 12,162 cents resistance level into play in the short term. A break above the initial resistance would leave the 13,098 cents resistance level within reach in the near future.
However, a break below the 100-SMA and 38.20% Fibonacci retracement level could offer trading opportunities towards the support level at 10,034. A successful break below the initial support would likely bring the 9,332 and 8,719 cents support levels within the bears’ reach in the short term.
Summary
MTN presents a compelling mix of positive fundamentals and technical ambiguity. While the company exhibits resilience and growth potential, with growth in key segments and a healthy financial position, particularly in fintech, the price action remains indecisive. A break above the 50% Fibonacci retracement level would signal a potential bullish resurgence, while a breakdown below the 100-SMA could trigger further declines.
A sustained push above the 50% Fibonacci retracement could trigger bullish momentum, with initial targets set at 12,162 cents and eventually 13,098 cents. However, a break below the 100-SMA and 38.20% retracement could trigger a bearish reversal, potentially pushing the price towards the 10,034 cents support level.
Sources: TradingView, Trading Economics, MTN, ShareNet, Simply WallStreet, Dow Jones Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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