BROKERS’ NOTES: Buy Exxaro, sell MTN
Patrick Mathidi of Aluwani Capital Partners on what the smart money is doing
Patrick Mathidi, head of equity and balanced funds at Aluwani Capital Partners
Exxaro is still cheap. We expect energy prices to start increasing as the northern hemisphere’s winter draws closer. In addition, the rand is not behaving well, supporting energy prices in the near future. Even with the problems at Transnet Freight Rail in shipping more coal to the Richards Bay Coal Terminal, the coal price is making up for it. Exxaro has a decent balance sheet, and the company pays decent dividends.
MTN hasn’t been liked for a while. First, there’s the macroeconomy story in Nigeria, one of its biggest markets. This hasn’t been supportive for MTN after the country’s elections earlier this year. Second, the company has been a target for extra taxes by Nigerian regulators in the past, and we need to see how that is going to play out. Finally, MTN faces some geopolitical issues, especially as it operates in Iran. If the Israel-Hamas war escalates and drags Iran in, the possibility of more sanctions is real. MTN is a good company, but it faces a lot of external issues.
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