SBG Securities expects growth in Safaricom’s service revenues, EBIT and earnings per share owing to digitization and business process engineering.
The Stanbic Stockbroker, however, maintains a strong buy recommendation for Safaricom shares as the stock price continues to soar.
This is even as the telco scraped charges fr Mpesa transactions below sh1000 for the next 90 days to ease cashless transactions due to the widespread coronavirus (COVID-19)
Investors who are keen on the firm’s revenues were rattled seeing as approximately 33pc of all Safaricom’s revenue is generated from Mpesa transactions. An analysis by Citi Research shows that an average Mpesa user makes thirteen transactions every month, these transactions average sh600. This is below sh1000 limit hence will not attract no charges.
However, SBGS expects earnings per share for Safaricom to grow by 18pc, as the service revenue jumps by 7pc. The broker expects service revenues from M-Pesa to grow by 13pc compounded rate for the next three years.
Citi also says the move by Safaricom to increased the daily transactions limit and expand the wallet size from sh300,000 will prove resourceful in the future by growing the number of active Mpesa users and overall chargeable transactions. The high wallet size will also improve Mpesa’s competitiveness in high-value transactions.
The revised SMEs transaction limits to sh150,000 from sh70,000 will alsoo support growth in business to business transactions.
Citi analysts also also say the short term drop in Mpesa revenue will be in turn paid off by a sharp increase in mobile data revenue as more people work from home and schools remain closed.
Due to the optimistic outlook, the experts have issued a strong buy recommendation on Safaricom shares. Their target price is KSh35, a 43pc spike from Monday’s closing price of KSh24.45 per share.
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]