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February 15, 2007
Bullish Indiactor For NII Holdings?
One of the comparables I used in my thus far successful purchase of NII Holdings (NIHD) was Millicom International (MICC). NIHD offers wireless telephone service in Mexico, Brazil, Argentina, Peru, and Chile using Nextel's iDEN technology. MICC uses traditional GSM technology in markets it serves in Central and South America, Africa, and Southeast Asia.
What both companies have in common is a focus on emerging markets and very fast growth. Both also have very high margins although NIHD's focus on business customers vs. MICC's focus on prepaid consumers means that ARPU is much higher at NIHD.
The reason I mention this is that MICC rose over $7, up 10%, yesterday after it reported blow out 4Q06 results. NIHD doesn’t report until February 27th but there are enough similarities that MICC's results should be a good sign. Obviously, investors were thinking the same thing yesterday as NIHD tacked on $3, or 4%, yesterday.
NIHD and MICC do not overlap in any country in Central or South America but NIHD's results coming from Guatemala, Honduras, El Salvador, Bolivia, Columbia, and Paraguay indicate that mobile phone markets in these geographies are very healthy. In Central America, MICC reported subscriber growth of 89% and EBITDA growth of 62%, while in South America, MICC saw 65% subscriber growth and EBITDA more than doubled.
NIHD is a compelling story in its own right as I outlined in my initial Long/Short Investor recommendation. MICC's results make me more confident that my investment thesis will be validated on February 27th so despite a 16% jump in NIHD since my initial purchase at the very beginning of January, I am remaining long with growing confidence that my reach target of $100 in 2008 is in the cards.
Posted by Steve Birenberg at February 15, 2007 07:47 AM in NIHD
MICC JUST LOST $2.50 ON NO BAD NEWS.WHY IS THERE ALMOST ALWAYS A LARGE PULLBACK AFTER A LARGE POSITIVE MOVE EVEN IF THE STOCK IS STILL FAR BELOW FAIR VALUE AND EVEN IF THE POSITIVE MOVE IS CALLED FOR BY SUPERIOR EARNINGS ETC..AS BEST AS I CAN FIGURE ,BASED ON NEW BLOWOUT EARNINGS,MICC IS WORTH APPROXIMATELY $100 TO $135 PER SHARE . AT $80,ITS PRICE IS STILL AT A MARKED DISCOUNT.YET,SIGNIFICANT PROFIT TAKING STILL TOOK PLACE.IN GENERAL,DO YOU NOTICE ANY HELPFUL PATTERNS IN THIS REGARD?
Posted by: MP at February 16, 2007 01:46 PMHi Mike:
THere really is no answer to your question. I jus think it is human nature for people to take profits after suc a big two day move. I wouldn;t read anything into it and I wouldn't be concerned.
I have read one follow-up report on MICC since they reported. I haven;t run any numbers but asusmng they keep reporting great numbers the stock will rise considerably more. Don't get hung up on one day moves. Those are for traders.
CETV's competitor in Czech Republic apparently reported very good 4Q results today. That is probalby why CETV is up sharply. SHould be a good sign for when CETV reports.
I am out of town and probalby won;t check email again until tomorrow.
Have a great weekend.
Steve
Posted by: at February 16, 2007 02:04 PM