Berenberg raises target price on Helios Towers

Berenberg said upside potential was underpinned by the company's "unique" towerco business model, which it feels offers investors currency-neutral exposure to the "high-growth dynamic of frontier markets" as it also allows the company to earn "outsized returns" on capital employed relative to the operating risk inherent in these markets.

The German bank, which reiterated its 'buy' recommendation on the stock, also updated estimates to reflect tenancy ratio growth, with net adds expected to be 1,000-1,500, and operational efficiency opportunities arising from the acquisition of 5,100 towers in the Middle East after recent deals in Oman, Malawi, Madagascar, Gabon and Chad.

However, Berenberg said it was still awaiting a "revised 2025" vision from the group, with communication expected to be received in the third quarter.

"On the closing of the recent deals, Helios will grow its presence to 11 markets and its Q1 2021 pro-forma portfolio to 13,682 towers. Including committed build-to-suit sites, Helios's site portfolio will reach 14,708. Given that Helios's 2025 vision was for eight-plus markets and 12,000 towers, we expect management to provide an updated 2025 vision in due course. As Helios will need time to formalise its medium-term plans, we do not expect a strategy update at the upcoming Q2 results, but rather in Q3," said the analysts.

"Helios is trading on FY 2022 EV/EBITDA of circa 12x. This is in line with the median of its emerging-market peers, but 25% below the top end. We believe Helios's uniquely currency-protected and high-returns business deserves to trade at the higher range of its peer group."