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• Analyst Thesis
  • We remain positive on MTN's earnings outlook due to the following reasons:
  • MTN’s recent price increases in Nigeria, implemented to counter inflation and higher network expenses, are expected to be fully reflect from the Q2 FY2025 results onwards.
  • MTN targets R7–8 billion in cost savings by 2026 through digitalisation and operational efficiencies which support margin expansion.
  • Nigeria inflation is projected to decline to 22.1% by end-2025, easing operating costs and improving consumer affordability.
  • Higher oil production should improve Nigeria’s fiscal and FX position, supporting MTN Nigeria’s operating outlook.
  • The cedi’s appreciation supports earnings quality and enhances cash repatriation from Ghana.
  • The $4.2 billion Turkcell lawsuit poses a notable risk, however, MTN’s underlying momentum and long-term growth drivers continue to support our investment case.
  Our research supports a hold recommendation.

1. Aspen is facing heightened uncertainty due to the unresolved dispute over its mRNA manufacturing contract, which could reduce EBITDA by up to R2 billion. The potential risk of a R770 million impairment further weighs on near-term profitability. Meanwhile, delays in regulatory approvals for insulin products are also pushing back expected revenue contributions, despite secured take-or-pay agreements.
2. Key points in the investment thesis are:

• Aspen is facing increased regulatory scrutiny in the US following an FDA warning letter, which has resulted in tighter compliance monitoring at a critical manufacturing site. This has elevated external perception risks in the near term specific to Aspen while there is a general drive in the US to move manufacturing domestically.
• Exposure to evolving trade dynamics: Potential tariff developments in the US market could increase cost structures and temporarily challenge export competitiveness in select product categories.
• Aspen is strategically entering the obesity and diabetes treatment markets via its partnership with Eli Lilly (Mounjaro) and plans to manufacture GLP-1 drugs by FY26, positioning it to benefit from rising global demand.
• Following the Sandoz China acquisition, Aspen plans to restructure the business in H2 FY25 to improve flexibility and regulatory readiness.
• Regulatory reforms in South Africa, including SAHPRA’s priority review framework, may accelerate approvals for key medicines and support Aspen’s local manufacturing strategy.

APN has an Intrinsic value of R131 per share (down from R206 previously) and a Hold recommendation.

• On 13 February 2025, British American Tobacco released full year results for FY24.

   

  • Total revenue declined 6.4% to £25.9 billion, due to regulatory issues in Bangladesh and Australia as well as larger than expected decline in cigarette volumes in the US. DEPS was up 2% to 2400.24 p/share.
  • Combustibles revenue was flat with price increases of 5.3% offsetting volume declines of 5.2%.
  • Profit from operations came in £2.7 billion impacted by a once off £6.2 billion charge related to provisioning for the settlement in Canada.
  • NGPs increased by £251 million and now have a contribution margin of 7.1%.
  • Adjusted net debt/EBITDA now sits at 2.44x, below the target of 2.54x.
  • A mixed bag of category performance with vapour disappointing at -5%, but Modern Oral growing at 46%, ahead of expectations.
  • Guidance remained unchanged at 1% revenue growth and share buybacks continue. Management guided for £700 million in FY24 (now completed) and a further £900 million in FY25. (Subsequently a further £200 million in share buybacks has been announced taking the total to £1.1 billion).

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  Our research supports hold recommendation.