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Business Reporter

Securities firm Morgan & Co expects Econet Wireless Zimbabwe share price to nearly triple from the current US$0.10 to US$0.30 per share this year on the back of increased foreign currency revenue flows.

Econet shares traded at an average of $100 (approximately US$0.10) per share throughout 2022. However, the company’s shares closed on Monday at $136.00 per share on the Zimbabwe Stock Exchange (ZSE), recording a 0.3 percent drop from its previous closing price of $136.4752.

The listed telecommunications and technology firm began the year with a share price of $96.2759 and has since gained 41.3 percent on that price valuation, ranking it seventh on the ZSE in terms of year-to-date performance.

Market analysts believe the company’s shareholders have reasons to be optimistic knowing the stock has accrued an outstanding 81 percent increase over the past four-week period alone — the second best on ZSE.

“The lagged tariffs reviews have dampened the recovery of the TMT sector in 2022 vis-a-vis resurgent inflation in the first half of the year. The sub-inflationary tariff adjustments will further compound Econet’s limited top growth in real dollars,” said Morgan & Co in a research brief.

“However, Econet remains resilient on the back of growing USD sales (25 percent of total revenue).”

The equities research firm noted that while resurgent power cuts are affecting operations in the telecommunications industry, Econet’s increased USD inflows will ease investor concerns over the nearing settlement of foreign currency denominated debentures and a modest capital expenditure spell.

Econet issued debentures valued at US$73 million in January 2017 with a tenure of six years and are maturing this year. The debentures form part of an earlier capital raise programme by Econet where the company sought to mobilise US$128 million, nearly half through debentures, needed to expunge the firm’s external debts.

The debts included a US$300 million syndicated loan secured after 2009 for network expansion. Creditors included Ericson, Industrial Development Corporation of South Africa, Afreximbank and China Development Bank.

Morgan & Co urged investors to hedge their funds against inflation by investing in the liquid Econet stock.

“We maintain our buy recommendation on Econet with a revised FY23 target price of US$0.3008,” added Morgan & Co.

Econet is the third most traded stock on the Zimbabwe Stock Exchange over the past three months (Oct 21, 2022 – Jan 23, 2023). The company has traded a total volume of 48.8 million shares valued at $4.52 billion over the period, with an average of 774,467 traded shares per session.

A volume high of 5.89 million was achieved on January 18th, and a low of 2,000 on November 29th, for the same period.