It’s official, Nigeria’s largest GSM Company, MTN Nigeria, will be listed on the Nigerian Stock Exchange on Thursday 16th of May 2019. As followers of the Nigerian Stock Exchange, we have waited for years for this to happen and we are glad to finally see this long-awaited announcement come alive.
What does this mean? By listing MTN on the Nigerian Stock Exchange, its shares can now be traded everyday by buyers and sellers. Until, now this was not possible as its shares were held privately by its investors. You could only previously buy and sell MTN shares in South Africa and until last year’s Ghana IPO.
Who can buy and sell MTN shares? MTN shares can only be bought or sold by retail and institutional investors who have a CSCS account and have an account from any registered stockbroker. You cannot buy MTN shares if you do not have a stock brokerage account from a stockbroker registered in Nigeria. To find a registered stockbroker just follow this link for the list of the top 10.
Why buy MTN shares? MTN Nigeria is a behemoth of a company reporting massive profits that run into over N160 billion. In its latest investor conference, it said that it reports a return on equity of about 90%. This means it makes a profit of N90 for every equity of N100 it investS. That’s unheard of for any quoted company in the country.
MTN also claims that to pays over 80% of its profits as dividends. It is also likely to list at N90 (and expected to climb as investors scramble for the shares), thereby placing it at a price-earnings multiple of 11x. It’s double-digit revenue and profit growth suggest this is actually a cheap price.
What price is great? Going by the numbers we have seen, MTN might be listed at N90 giving it a price-earnings ratio of 11x (we assumed an earnings per share of N8 based on profits of N160b). If you consider that MTN‘s price-earnings ratio has the potential to rise to as high as 30x, then the share price could easily be N240 by year end. MTN South Africa trades at 29x earnings per share, so this theory is far fetched. MTN could, therefore, be a good stock to buy for any price between N90 and N160 giving investors a good upside.
How do I buy MTN Shares? As stated above, you will need to have a stock brokerage account if you are to buy MTN shares. The shares will be listed on Thursday, which means investors (both retail and institutional) have a shot at buying. However, to buy means there must be a willing seller. Once you have a willing seller ready to accept your offer price, then you are sure to have a deal.
Quick steps to start;
- Deposit money into your stock brokerage account
- Instruct your stockbroker to buy for you at your determined price
- You can also buy yourself if you operate an online trading account with the same stock brokerage account.
- If you go through the online portal, you place your bid and hope that an offer is available for you at the right price and you have a deal.
- You get an email from your stockbroker confirming that you now own shares in MTN
Upshots: We think MTN shares are going to be really scarce for now as investors who own it are private. They will only sell if they really need cash and if the price is right. MTN revealed its plans to have an IPO (Initial Public Offering) “soon” which will create new shares. This might be when a lot of Nigerians will get the opportunity to buy. Do not expect the price to be N90 by then.