Investment journal 17.10.2019: Telia LT Q3 update & exit

Quite disappointed. Revenue is up quite a bit, 3,5 % ex. voice. But this has come with cost of margin. Gross margin was 57,6% vs. 61% %ish average before that. I was expecting profit growth but due to discounting it’s really not materializing.

EBT has been declining for 4 quarters in a row. My thesis has been that there’s at least some growth. Using 15x PE and on trailing earnings I see 14% upside so not very much.

I don’t see great mispricing here anymore as the growth has stalled.

They said that they will rationalize the business further so some patience could do. But I can always get back in if he profits start to grow again. Besides, I probably have better ideas coming in so I could use the ammo.

So sold the stock (whole position) for 1,19-1,95 eur. Annualized EBT for the 1-1,5 year holding period was 10-11% before tax including dividend (but after cost). That’s probably small beat re Nordic general indices and Baltic indices.

Elisa was up 5% on a earning beat so that stock is really on the roll and the PE premium to Telia Lietuva is widening.

I have speculated with rule that I will average in and out. Well, I sold whole position at once. This is probably partly emotional but why wait if your thesis is no longer intact?

Edit: Just to make it clear here, I’m speaking of Telia Lietuva here

Disclosure: No position anymore

Older posts

Investment journal 9.6.2019: Telia LT situation update

Telia Lietuva: Growing Baltic Telco (with Discount?)

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