Two Telcos That Offer Value Amid Volatilty
With volatility roiling global markets in recent weeks, Christopher Mittleman, Chief Investment Officer at Mittleman Brothers Investment Management, recommends that investors ignore the short-term events - like the Greek crisis - and focus on fundamentals.
"I know it's a big deal for the market, it's one of the overarching concerns on a day to day basis, but I think investors will be best focused on what the fundamentals are, the individual securities that they're looking to own," Mittleman told CNBC on Wednesday.
In Asia, he likes telecommunication plays, particularly South Korea's dominant fixed line telco KT Corp and Thailand's satellite firm Thaicom.
"Whether Greece defaults or doesn't default… the demand for basic telecommunication services is almost like a utility type demand and it shouldn't be swayed by these other concerns," he said.
Mittleman bought shares of KT, which he describes as "a highly recession-resistant company with reasonable growth prospects," at the start of June for $18.33 per share, which he considers a bargain.
"I think the stock, currently [at] around 18 and a half, is worth close to $30, and that would only be about four and a half times Ebitda multiple on a Ebitda I think is around 4.3 billion dollars," he said.
It's a similar case for Thaicomm, which Mittleman picked up for 5.50 bhat per share. He says the stock, which currently trades at 8.20 baht, has a fair value target of 13.75 baht. Mittleman is upbeat about the firm's growth potential, particularly its new broadband satellite arm - IPSTAR - which is making inroads in China and India.
"It's really a pan Asian wide story, it's in China, they're getting involved in India, they're selling their service in Malaysia, Australia, New Zealand, so it's not just what's going on in Thailand that's going to dictate the success in this investment."
He brushed off concerns over political turbulence, as Thailand gears up for its general election this weekend.
'"I don't think whoever ends up running the country is going to take a stance that's against the basic capitalist principles that allow business to operate favorably there," Mittleman noted. "Thailand has always been favorable towards business and I think that's all that's necessary for a company like Thaicom to thrive."