Shares of debt-ridden Vodafone Idea surged by more than 11% on Monday, following the announcement of a major deal to secure telecom equipment for its upcoming 4G and 5G network expansion.

The telecom operator inked agreements worth $3.6 billion (Rs 30,000 crore) with Nokia, Ericsson, and Samsung, marking a critical step in its transformative three-year capital expenditure plan.

The announcement comes as Vodafone Idea aims to expand its 4G coverage from 1.03 billion to 1.2 billion people and roll out 5G services in key markets, with a projected total capital investment of $6.6 billion (Rs 550 billion).

The company made this disclosure in a stock exchange filing on September 22, noting that its capex programme also focuses on expanding capacity in line with increasing data consumption.

The surge in share price follows VI’s sharp 20% fall on Thursday after the Supreme Court dismissed the company’s curative petition, which sought a re-computation of Adjusted Gross Revenue (AGR) dues.

Vodafone Idea’s financial performance shows improvement

Following the deal announcement, Vodafone Idea’s stock price rose by 11.46% to Rs 11.67 on the Bombay Stock Exchange (BSE).

The company emphasized that this partnership with Nokia, Ericsson, and Samsung would enable a smooth transition into the 5G era.

“Vodafone Idea has concluded a mega $3.6 billion (Rs 30,000 crore) deal with Nokia, Ericsson, and Samsung for the supply of network equipment over a period of three years,” the company stated.

The agreements mark the beginning of a new chapter in Vodafone Idea’s journey to restore its competitiveness in India’s telecom market.

Akshaya Moondra, CEO of Vodafone Idea, remarked,

We are committed to investing in emerging network technologies to provide a best-in-class experience to our customers. We have kickstarted the investment cycle. We are on our journey of VIL 2.0 and from hereon, VIL will stage a smart turnaround to effectively participate in the industry growth opportunities.

Ongoing financial restructuring and capex initiatives

Vodafone Idea’s $3.6 billion telecom equipment deal is part of broader efforts to revitalize its operations, which include a series of quick-win capital expenditures following a recent equity raise of ₹240 billion and an additional ₹35 billion spectrum acquisition in June 2024.

The company revealed that these short-term capex activities have already led to a 15% boost in network capacity, while increasing population coverage by 16 million as of September 2024.

“The capex is currently being funded out of the equity raise,” Vodafone Idea said in its stock exchange filing.

It added that the firm is in advanced discussions with both existing and new lenders to secure an additional ₹250 billion of funded and ₹100 billion of non-fund-based facilities for its long-term capital expenditure plans.

Setbacks from Supreme Court ruling on AGR dues

Despite the positive market response, Vodafone Idea’s financial challenges persist.

Last week, its shares faced heavy selling pressure following an unfavourable ruling from the Supreme Court of India, which rejected the company’s plea for a re-computation of its adjusted gross revenue (AGR) dues.

Vodafone Idea had been seeking a ₹60 billion reduction in its AGR liabilities, which currently stand at ₹700 billion.

Brokerage firm Nuvama Institutional Equities pointed out that the rejection dealt a significant blow to the company’s revival efforts.

However, it noted that the 20% stock price drop on Thursday largely priced in the impact of this incremental liability.

“Hereafter, the focus shall shift to Vodafone Idea’s progress on key operational parameters – pace of subscriber loss, tariff hike impact, and capex velocity,” the firm said, maintaining a ‘Hold’ rating on the stock with a 12-month target price of ₹11.5 apiece.

Analysts cautiously optimistic on long-term prospects

Although Vodafone Idea is burdened by significant debt, analysts remain cautiously optimistic about the company’s long-term prospects.

Hemang Khanna, Vice President and Research Analyst at Nomura, commented,

Despite its large debt burden, Vodafone Idea will be able to steadily repair and rebuild its business and partake in the robust outlook for the Indian telecom industry in the coming years, with government support.

Analysts at UBS echoed this sentiment, highlighting that while the Supreme Court’s rejection of Vodafone Idea’s AGR plea reduces the likelihood of an outright waiver, options such as debt-to-equity conversions or extended moratoriums remain on the table.

UBS maintained its ‘Buy’ rating on the stock, signaling confidence in the company’s ability to recover despite the current headwinds.

In the short term, Vodafone Idea faces significant challenges, including subscriber losses.

Data from the Telecom Regulatory Authority of India (TRAI) indicated that the company lost 1.41 million users in July.

Competitors Jio and Bharti Airtel also saw declines, while BSNL added 2.9 million subscribers during the same period.

As Vodafone Idea embarks on its ambitious 5G journey, analysts caution that limited visibility on its 5G rollout could hinder subscriber retention, potentially impacting revenue growth.

“It would take at least 25-30 years for Vodafone Idea to organically repay its obligations,” warned analysts at Macquarie, underlining the importance of government intervention and continued tariff hikes to stabilize the company’s finances.

The post Vodafone Idea shares soar more than 11% after $3.6 billion deal with Nokia, Ericsson and Samsung appeared first on Invezz

Yelp (NYSE: YELP) stock price has gone nowhere since 2015 as concerns about its growth and role in the tech industry has remained. In this period, it has remained inside the range of $14.17 and $52 while popular indices like the S&P 500 and Nasdaq 100 indices have soared to a record high. It remains 66% below its highest point on record. 

Struggling for relevance

Started over 20 years ago, Yelp is one of the top survivors of the dot com bubble burst. Its goal has been to improve local businesses by ensuring that users leave reviews and ratings after using their services. 

Over the years, the website has accumulated over 287 million reviews and ratings, making it one of the top players in the industry. It also has over 7.1 million local businesses in its ecosystem.

However, it has come under intense pressure in the past few years as competition in the sector has grown. Most people today leave their feedback in platforms like Google, Facebook, Amazon, and even X, formerly known as Twitter.

As a result, Yelp’s revenue has grown, albeit at a slower pace in the past few years. Its annual revenue has risen from about $872 million in 2020 ro over $1.2 billion in the last financial year. 

Yelp makes its money in various ways, including advertising and transactions. Local businesses have an incentive to keep advertising on Yelp because it is still a large brand in the US. Most of the businesses in its ecosystem, with restaurants and retail accounting for about 40% of its revenue.

Data by SimilarWeb shows that Yelp had over 148 million visitors in August, down by 1.69% from the previous month. Most of these visitors, or about 78%, came from organic search, especially Google.

Yelp’s financial results

Yelp’s business has been growing, albeit gradually in the past few years. Its annual revenue stood at over $1.33 billion in 2023 and $1.37 billion in the trailing twelve months (TTM).

However, its profits have remained quite small over the years. After making a net loss of $19.4 million in 2020, its annual profit has recovered to $99.2 million in 2023 and $137 million in the trailing twelve months.

The most recent financial results showed that Yelp’s revenue rose by 6% in the last quarter to over $357 million. Its net income jumped by 158% to $38 million while its adjusted EBITDA came in at $91 million. 

The management hopes that its full-year business will continue doing well, with its full-year revenue expected to come in at between $1.41 billion and $1..4 billion.

Yelp also has a solid balance sheet, with over $392 million in cash and short-term investments and almost no debt. Its short-term debt and capital leases are less than $70 million.

Looking at its valuation, we see that the company has a non-GAAP P/E ratio of 8.39 and 9.67, respectively. Its GAAP multiples are 18 and 20, respectively, which are lower than the industry median.

Analysts are relatively neutral on the Yelp stock price. The average target among analysts is $39.43, higher than the current $34.28, a 20% increase. 

Bank of America analysts have an underperform rating while Morgan Stanley has an underweight rating. JPMorgan has a neutral view while Craig-Hallum has a buy rating.

The neutral view is mostly because analysts don’t expect the business to see the double-digit growth metrics they were used to before. It is facing substantial competition from the likes of Google and Facebook and demand for its advertising solutions seems to be waning.

Yelp has also been reducing its costs to grow its profitability. Its sales and marketing spending has dropped from between 51% amd 57% between 2013 and 2018 to about 42%. Its adjusted EBITDA margin is expected to grow from 13% in 2013 to 25% in 2023.

Read more: Yelp, Ripple CEOs among top executives endorsing Kamala Harris

Yelp stock price analysis

Yelp chart by TradingView

Fundamentally, I believe that Yelp’s business faces substantial challenges in the coming years. However, the company has continued to do well, constantly growing its revenue and profitability. 

Turning to the weekly chart, we see that the Yelp share price peaked at $49 earlier this year and has now retreated to below $35. It has slipped below the key support level at $43.85, its highest swing in May 2021. 

Most importantly, the stock is about to form a death cross as the 200-week and 50-week moving averages near their crossover. It also lost the key support level at $35.56, its lowest point in February this year.

Therefore, the path of the least resistance for Yelp stock is downwards, with the next point to watch being at $25.32, its lowest swing in 2023 and 26% below the current level.

The post Yelp stock is cheap: is it a classic value trap or a bargain? appeared first on Invezz

Samsung Display Co., a leading South Korean electronics manufacturer, plans to invest $1.8 billion in a new OLED display factory in northern Vietnam this year.

The facility, located in the Yen Phong industrial park, Bac Ninh province, will focus on producing OLED screens for automotive and tech equipment, according to a statement from the Vietnamese government.

The announcement came after a meeting between Vietnam’s Prime Minister Pham Minh Chinh and Samsung Vietnam’s General Director Choi Joo Ho.

This investment boosts Samsung’s total investment to $8.3 billion from its previous $6.5 billion investment in Yen Phong Industrial Park, with Bac Ninh authorities and Samsung Display formalizing the deal through a memorandum of understanding.

Vietnam: emerging key electronics manufacturing hub

Vietnam has established itself as a key production hub for major electronics companies over the last decade.

On Sunday, Bac Ninh Province in northern Vietnam granted investment approvals, registration certificates, and memorandums of understanding for 18 projects.

Apart from South Korean tech giant Samsung, these projects include investments from major companies like Taiwan’s Foxconn, and Amkor Vietnam, with a total pledged capital exceeding $5.5 billion.

Global partnerships expand Samsung’s market reach

Samsung is further expanding globally, having been onboarded by Vodafone Idea alongside Nokia and Ericsson in a $3.6 billion deal to supply network equipment for three years, marking Samsung’s entry as a key partner.

With a cumulative investment of $22.4 billion in Vietnam, including six manufacturing plants and one R&D center, Samsung continues to strengthen its global presence and partnerships, driving innovation in electronics production.

This latest investment strengthens Samsung’s commitment to Vietnam’s growing electronics sector, as the company continues to scale its operations in response to rising global demand for OLED displays.

The post Samsung to invest $1.8 billion in new OLED manufacturing plant in Vietnam appeared first on Invezz

The civil aviation and defense industries are doing well, helped by the ongoing recovery of travel and defense spending. 

However, top companies in the industry are not doing well. Boeing (BA) stock price has dropped by over 41% this year as it moved from one crisis to the other. Just recently, the company suffered a major setback as some of its workers went on strike.

Airbus stock has dropped by over 3% this year even as it continued to take market share in the civil aviation industry. Its most recent financial results showed that its backlog continued rising. 

Airbus stock has dropped by over 3% this year because of the supply chain issues that have affected its plane manufacturing process. 

Arline stocks have had a mixed performance this year. Southwest (LUV) stock has risen by 2.35% because of the activist pressure from Elliot Management. Delta and United Airlines have risen by 17% and 26%, respectively. However, airline stocks tends to be more cyclical.

Aercap seems like a better bet

Aercap, a company that most people outside of the aviation industry, is doing much better than airlines, Boeing, and Airbus. 

Its stock has risen by 31% this year and by 76% in the past five years. In this period, Boeing has dropped by 60% while Airbus has jumped by just 14%. Airlines like Southwest, United, Delta, and American have all dropped by over 20%.

Aercap operates in the aircraft leasing industry, where it buys aircraft and then provides them to other airlines. It provides most of its aircraft to companies like American Airlines, China Southern, Azul Airlines, Hainan, and Ethiopian Airlines. It owns 1,556 aircraft and has placed an order of 338.

These companies opt for leasing aircraft instead of buying because it is a more cost-efficient model. 

In addition to aircraft leasing, Aercap has over 1,000 aircraft engines, which it leases to companies. Most of its engines are manufactured by General Electric and CFM International, a joint venture between Safran and GE. Aercap is also a big player in the helicopter and aviation leasing industries. 

Read more: Forget Airbus, Boeing stocks: Embraer and Bombardier are cruising

Aercap has been growing

Aercap’s business has been growing in the past few years. It has done that organically and through acquisitions. Its biggest acquisition was General Electric’s aviation business in a $30 billion deal. 

That acquisition, which was mostly through stock, gave GE a big stake in the combined company. GE has continued to reduce its stake in the firm as it continues with its transformation.

The deal solidified Aercap’s role as the biggest aircraft leasing company in the world. It also saddled it with substantial debt, which has risen from over $29.34 billion in 2019 to over $45 billion today.

Aercap’s financials shows that the company was still growing. Its total revenue has grown from about $4.9 billion in 2019 to over $7.5 billion in 2023. 

The most recent financial results showed that Sercap’s revenue rose to over $1.74 billion, a 2% increase from the $1.95 billion it made in the same period in 2023. For the first half of the year, revenue rose by 5% to over $3.9 billion. 

Analysts expect that its revenue for this year will be $7.85 billion a 3.5% increase from last year’s $7.58 billion. This revenue will be followed by $8.06 billion in the next financial year. 

Plane shortage and pricing

Aercap’s main benefit is that it has a long relationship with Airbus and Boeing since it is one of the biggest buyers. 

It also has a large inventory of over 2,000 planes at a time when Boeing and Airbus are going through major challenges. The implication is that it can now charge more money for its aircraft. 

Additionally, the company has received a series of credit rating upgrade, with Moody’s moving its rating to Baa1 and S&P raising it to BBB+. Fitch has revised its rating to positive. 

Aercap credit ratings | Source: Aercap

Also, the company has increased its share repurchases after it bought 3.9 million shares in the second quarter.

Aercap stock price analysis

Aercap stock by TradingView

The weekly chart shows that the Aercap share price has been in a strong bull run in the past few years. It recently jumped above the key resistance point at $70.95, its highest point in November 2021.

The stock has also remained above the 50-week and 200-week Exponential Moving Averages, which formed a golden cross pattern in 2023. In price action analysis, this is one of the most bullish signs in the market.

Most oscillators have continued pointing upwards. Therefore, the stock will likely continue rising as bulls target the next psychological point at $120. This view will only become valid when the stock rises above the key resistance point at $98.56, its highest point this year.

The post I’d avoid Boeing and Airbus stocks and buy Aercap instead appeared first on Invezz