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July 23, 2008
NII Comes Through and the Sentiment Turns
What a difference a day makes! After Tuesday brought nothing but bad news for wireless investors, NII Holdings (NIHD) reminded us that there can still be winners in the group.
NIHD jumped almost 8% at the open and built on the gains to close 11% higher. The company reported great 2Q08 results with pretty much ever key metric coming I ahead of analyst estimates. This marks the second consecutive quarter where the company reported upside. This time it is enough to rebuild confidence and put an end to lingering negative sentiment form the stocks crash form $90 last summer to a low $30 as worries mounted over its iDEN technology and competition in Mexico, its largest market. The whole tone of the conference call was improved. I think it marks a turning point and with a little help form the market the stock can get back to the $60s before year end.
NIHD is a dynamic growth company. ..
....In 2Q, revenues grew 40%, EBITDA grew 48%, subscribers grew 34%, and EBITDA margins expanded. Currency helped but the organic growth rates are in the 30% range. Net adds grew sequentially. Mexico enjoyed 24% revenue growth and expanding margins. Brazil, the #2 market, is blazing. Revenues up more than 70% for third straight quarter, EBITDA doubled, subs up 41%, net adds grew sequentially for the tenth straight quarter.
In the press release and on the call, management stated it is on track to meet or exceed guidance. Estimates are headed up. The stock is trading at 8.8 and 7.0 times 2008 and 2009 EBITDA. That is a premium to the group but one that NIHD has always held and had earned prior the sentiment shift when serious questions about the sustainability of growth arose about a year ago. NIHD is back and so is the premium.
Posted by Steve Birenberg at July 23, 2008 03:12 PM in NIHD
1THE NORMAL BEAR MARKET IS APRROX. 8MONTHS OR SO. THIS DOWNTURN STARTED TO SOME DEGREE JULY,2007.
DO YOU THINK WE ARE GETTING ANY CLOSER TO THE END OF THIS BEAR MARKET_OR DO YOU THINK THIS BEAR MARKET WILL BE LONG AND DEEP LIKE 2000 TO 2002?
2WHAT DO YOU THINK OF MICC AT PRESENT?
3 WHAT DO YOU THINK OF THE PURCHASE IN BULGARIA AND CETV'S PROBABLE EARNINGS REPORT TOMORROW?
1. I think the lows are in for awhile. It will take new set of horrible events to break 1200 on the S&P 500. The rally today despite the huge Merrill writedown shows that it will take somehting new and different to break this market again. However, I think upside is limited to a decent rally because the economy is clealry slowing globally and consumer and business spending is retrenching.
2. I have no opinion on MICC at the moment. Globally wireless is slowing so until they show renewed growth acceleration MICC seems unlikely to catch much of a bid. IT is beat up badly so a bounce back to the $80s seems plausible if the market rallies.
3. I expect a strong report from CETV at or above the top end of estimates. I don;t know enough aobut Bulgaria yet to have an opinion but it seems like it could be a decent acquistion if in a few years it is the #2 station whch would mean the cash flow multiple at that point would have been under 10 times for a 20% plus growth opportunity. I expect there will be a lot of questions on the call about Bulgaria. Bulgaria and Ukraine will be major topics at the October analyst meeting as well. I bought shares over the past month and I am holding them into the report so I guess that means I expect a good report and positive reaction. But in this market with this stock who knows. What I do know is that the long-term story remains superb.
Posted by: Steve at July 29, 2008 12:05 PM1AMAZING QUARTERLY MEETING FOR CETV.
GARIN ET.AL WERE ALMOST PERFECT DESPITE A GRILLING
BY THE ANALYSTS.UNLIKE THE CEO OF MICC, HE WAS ABLE TO FIGHT OFF NEGATIVE ATTACKS AND YET REMAIN CONFIDENT AND POLITE.DESPITE THIS TREMENDOUS QUARTERLY MEETING,THE STOCK IS UP LESS THAN $3-WHAT A TOUGH MARKET.
WHAT ARE YOUR THOUGHTS IN THIS REGARD.