Our opinion on the current state of MUSTEK(MST)Mustek (MST) is South Africa’s largest assembler of personal computers under its *Mercer* brand and also imports various computer products, including Samsung, Acer, and Microsoft. Historically, the company has traded well below its net asset value (NAV).
The company has been exploring growth opportunities in the fibre-to-the-home market and has seen strong sales in cables supporting this sector. CEO David Kan has expressed optimism about the potential exponential growth in this area. Additionally, Mustek is positioned to benefit from increased demand for remote education and work-from-home technologies post-COVID-19.
However, in its results for the year to 30th June 2024, Mustek reported revenue down 16% and headline earnings per share (HEPS) down 82.1%. The company attributed this decline to weak corporate and government spending and the sudden end of the *green energy boom*, which had previously driven strong sales. Mustek found itself with surplus stock in an environment of high interest rates and declining demand for alternative energy products.
In a trading statement for the six months to 31st December 2024, the company estimated that HEPS would fall by between 70% and 80%, citing *"the adverse impacts of the prevailing local and economic challenges."*
Despite these negative results, the share appears undervalued. It has recently broken above its 200-day moving average, which could signal the beginning of a recovery. If economic conditions improve and corporate/government spending resumes, Mustek may see better performance in the medium to long term.
MST trade ideas
Our opinion on the current state of MUSTEK(MST)Mustek (MST) is South Africa's largest assembler of personal computers under its brand name Mercer. It also imports a variety of computer products, including Samsung, Acer, and Microsoft. The company consistently trades well below its net asset value (NAV).
Mustek is beginning to benefit from its fibre-to-the-home activities and is selling additional hardware as a result. The CEO, David Kan, is very excited about the exploitation of the fibre-to-the-home market. He believes there can be exponential growth of as much as 500% in their sales of cables for this market. There is also a possibility that the company will benefit from the increased demand for remote education and work-from-home solutions following COVID-19. Mustek is well-positioned to exploit this through its existing products.
In its results for the year to 30th June 2024, the company reported revenue down 16% and headline earnings per share (HEPS) down 82.1%. The company stated, "Prevailing uncertainty froze corporate and government spending, and the unexpected abatement of loadshedding abruptly ended the green energy boom, which fuelled our growth last year. Reduced demand for green energy products plunged us into a dark period with surplus stock in a hostile macro-economic environment with high interest rates."
Despite the negative results, the share seems cheap, and it has broken up through its 200-day moving average, which looks positive.
Mustek`s Cup & Handle pattern in play.After tumbling from its all time highs of R18.05 in April 2023, JSE's Mustek Limited went on a steep downtrend and reached lows around R8.00 beginning of April 2024.
The instrument has since formed a Cup & Handle pattern from this R8.00 zone on the 'Daily' line chart, giving bullish reversal sentiments up to at least R10.44 and a +13.4% run chance from current levels. An aggresive long position can be initiated at current market order, otherwise conservatively around R8.98 to target TP1 at R10.44, TP2 at R11.19 and TP3 at R12.25 and all with a Stop Loss at R8.40. A greed target can also be placed at around R13.27 while utilising the same stop loss.
Bearish sentiments will be in play once the intrument slips below R8.50.
Our opinion on the current state of MSTMustek, South Africa's leading assembler of personal computers under the Mercer brand, along with importing a range of computer products from renowned brands like Samsung, Acer, and Microsoft, trades significantly below its net asset value (NAV). The company is starting to see benefits from its fiber-to-the-home initiatives, driving additional hardware sales. CEO David Kan has expressed optimism about the burgeoning fiber-to-the-home market's potential for exponential growth, possibly up to 500% in cable sales. This optimism extends to potential gains from the surge in remote education and work-from-home trends post-COVID-19, positioning Mustek favorably to leverage its product offerings in these emerging markets.
In July 2021, Mustek assessed the damage from unrest and looting, estimating losses not to exceed R20 million, indicating the company's resilience amidst external challenges. For the fiscal year ending June 30, 2023, Mustek reported a 13.7% increase in revenue and a 5% increase in HEPS, with NAV per share also rising by 13.8% to 2724.36c, underscoring its robust performance and strategic positioning as an end-to-end ICT and sustainable technology solutions provider.
However, a trading statement for the six months ending December 31, 2023, indicated a projected decline in HEPS of between 55% and 65%, reflecting the adverse impacts of local and economic challenges on the Group's performance. Despite this downturn, with a P:E of 2.99 and a dividend yield of 5.49%, Mustek's shares appear undervalued. Investors are cautioned to look for a breakout above the 200-day moving average before considering an investment, to gauge the potential for a recovery in share price and company performance amidst the prevailing economic headwinds.
Our opinion on the current state of MSTMustek (MST) is South Africa's largest assembler of personal computers under its brand name Mercer. It also imports a variety of computer products such as Samsung, Acer and Microsoft. The company consistently trades well below its net asset value (NAV). The company is beginning to benefit from its fibre-to-the-home activities and selling additional hardware as a result. The CEO, David Kan, is very excited about the exploitation of the fibre-to-the-home market. He says there can be exponential growth of as much as 500% in their sales of cables for this market. There is a possibility that the company will also benefit from remote education and work-from-home following COVID-19. Mustek is well-positioned to exploit this through its existing products. On 16th July 2021 the company reported on the unrest and looting saying, “The Group is assessing the damage caused to its branch and total losses to inventory and equipment is not expected to exceed R20 million". In its results for the year to 30th June 2023 the company reported revenue up 13,7% and headline earnings per share (HEPS) up 5%. The company's net asset value (NAV) increased 13,8% to 2724,36c per share. The company said, "Mustek has largely succeeded in asserting itself as an end-to-end ICT and sustainable technology solutions provider required for a changing world. In conjunction with strategic partners from across the ICT industry Mustek is well positioned for the forthcoming years". On a P:E of 4,2 and dividend yield of 3,91%, the share still seems cheap to us.
UPDATE: Mustek is on its way to R19.09 on trackW Formation formed and broke above.
We then had some whipsaws (jumps). The volatility of the markets showed that the stop loss needed to be wide and far from the general movements.
This is what keeps you from being shaken out.
Then other indicators showed upside to come including.
7>21 (Bullish)
Price >200 (Green)
RSI>50 (Green)
The target remains at R19.09. The momentum is picking up nicely.
ABOUT THE COMPANY
Mustek Limited was founded in 1987 and is headquartered in Midrand, South Africa.
Mustek is a distributor of computer hardware and software, including PCs, laptops, printers, and peripherals.
The company operates in the ICT (Information and Communication Technology) sector and has four main business units: Mustek Limited, Rectron, Mecer, and Mustek Security Technologies.
Mustek has operations in South Africa, Botswana, Namibia, Mozambique, Zambia, and Zimbabwe.
Mustek Limited is the oldest and largest of the company's business units and is focused on the distribution of IT hardware and software products.
Rectron, a subsidiary of Mustek, is a distributor of IT products and solutions to the Southern African market.
Mustek has a partnership with Lenovo, a global technology company, to distribute Lenovo's products in South Africa.
Mustek has formed a W 1st Target - R19.09 New name W-ustek!Mustek has formed a W Formation and had broken up and out of the neckline
7>21 (Bullish) and Price >200 SMA (Green)
RSI>50 and plodding nicely up (Green)
Bullish momentum
Target R19.09
GENERAL COMPANY INFO
Mustek operates in the technology and electronics sector and is one of the largest distributors of IT products in South Africa.
The company's product portfolio includes computer hardware, software, and consumer electronics.
You'll find a whole bunch of top brands at Mustek shops including Acer, AOC, ASUS, Brother, Canon, Dell, Epson, Fujitsu, HP, Lenovo, Lexmark, LG, Samsung and many more.
The company has a number of subsidiaries, including Mustek Systems and Mustek PowerSure.