Updates – Magyar Telecom, Walmart
Magyar issued 2011 results some days ago. The stock reacted positively on this. Some analysts seem to have expected less. If one looks at the “Normalized” numbers and cash flowws, both, free cashflow and “underlying EBITDA” decreased slightly in HUF terms (2-3%). With inflation in Hungary at around 5%, we see a real shrinkage of 7%.
If we look back to the initial case, we are somewhere between case 1 and case 3 with a fair value range between 416 HUF and 717 HUF, the more optimistic cases seem to be rather unrealistic, especially concerning the new entrant into the Hungarian mobile market. At a current price of 600 HUF, I actuallay think that the stock might be more or less fairly priced.
If one wants to bet on the Hungarian Forinth or an improvemt in the politival risk, Hungarian Government bonds with a yield of 8-9% might be the easier bet.
So starting today, I will sell down the Magyar Telecom stake with the usual restricitions.
Walmart has missed expectations with its 2011 earning release. Although I don’t care about analyst expectations, it is also intersting to see that the stockprice didn’t manage to surpass a kind of 15 year trading range if one looks at the long term chart:
As this is a rather “low conviction” play from my side, Walmart will be one of the next stocks to go if I find better opportunities.