Multichoice Group Ltd (JSE: MCG), a stalwart in the entertainment industry, emerges as a standout performer in the JSE Top 40 Index with a remarkable 7% year-to-date gain. This resurgence follows a challenging period, witnessing a substantial 30.88% drop in market value in 2023, marking the third consecutive year of stock market setbacks. The company navigated formidable headwinds, including disruptive power cuts in South Africa and steep inflation, eroding consumer discretionary spending.
Nevertheless, despite the challenges faced, a ray of hope surfaced in the latest financial report. DSTV Stream witnessed an impressive 87% surge in active users from July to September 2023, and DSTV Premium customers saw a 5% growth in the first half of the year. Multichoice’s strategic resilience is underscored by a 4% organic growth in group revenue to ZAR28.3bn, fuelled by a 3% uptick in subscription revenues, particularly driven by robust expansion in the Rest of Africa market.
Looking forward, Multichoice Group is set to redefine its trajectory with ambitious plans. With a focus on expanding its ecosystem, relaunching Showmax, and venturing into the South African sports betting market, the company aims to broaden its customer base to 50 million in five years. This strategic pivot emphasizes interactive entertainment and consumer services, setting the stage for renewed growth and increased shareholder value in the dynamic landscape of the entertainment industry.
Technical
Multichoice Group’s stock exhibited a robust seven-week uptrend, accentuating its resilience. However, a minor setback of 3.92% this week signals a potential shift in momentum.
Technical analysis on the Daily chart reveals a pivotal moment as the share price embarked on an upward trajectory after surpassing the 100-day moving average, indicating a positive turn from the oversold RSI conditions at ZAR 62.31 per share, subsequently forming a support level.
The rally gained momentum, surpassing critical Fibonacci Retracement levels, notably the 61.80% Golden ratio, reflecting heightened bullish sentiment. The surge, however, faced resistance at ZAR 97.15 per share, with overbought RSI conditions hinting at a slowdown in momentum. The recent three-day decline raises the prospect of bearish pressures, potentially leading to a reversal. Market sentiment now hinges on the critical Golden ratio, potentially serving as a short-term focal point if bears assert dominance. Conversely, a resurgence of bullish momentum could see a retest of the ZAR 97.15 per share resistance level.
Summary
Multichoice Group showcases resilience with a 7% YTD gain, rebounding from a challenging 30.88% drop in 2023. Strategic resilience is evident in the 4% organic revenue growth to ZAR28.3bn, fuelled by DSTV Stream’s 87% surge in active users and expansion plans. Technically, a pivotal moment occurred as the stock surpassed the 100-day moving average from a support level at ZAR 62.31, yet faces resistance at ZAR 97.15.
Sources: Multichoice Group LTD, Moneyweb, Financial Times, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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