1. HORIZON: 0 - 5 months (Short-Term)
2. FROM: 04 September 2025 | UNTIL: 03 February 2026
3. MANAGEMENT ASSESSMENT: 32.5% growth
4. RECOMMENDATION: BUY
5. PROJECTION BASED ON: R10 000
● Optimal entry: Look for buying opportunities in the R12.50 - R13 range, which was a support level before.
● Downside protection: Set a stop loss at R11, to limit potential losses.
● Upside target: The primary take-profit target is R17, a potential 32.5% return from the current level.
● Unlocking value through Cell C listing: The primary catalyst is the planned unbundling and separate listing of its subsidiary, Cell C, on the JSE. This move might potentially unlock value.
● Strong financial turnaround: The company reported an increase in earnings for the 2025 financial year, with headline earnings up over 258%. This was driven by the positive contribution from Cell C for the first time in years, signalling a successful operational turnaround.
● Strategic restructuring: Blue Label is actively working to clean up Cell C's balance sheet by converting debt to equity, which will make the newly listed entity more attractive to investors and could lead to a significant re-rating of the share.
● Recent price surge: The share has seen a massive run-up in 2025 but also a sharp 20%+ correction after the latest earnings report.
● Mixed technical signals: While the long-term 200-day simple moving average (SMA) is flashing a buy signal, shorter-term moving averages are pointing to strong sell signals, reflecting near-term weakness. At the same time, the relative strength indicator (RSI) is in oversold territory, suggesting that bullish momentum could soon emerge if buying interest picks up.
● Key support & resistance levels: The share is currently trading above the key long-term support level at R12. The recent high around R17.42 acts as a resistance level.
● Execution risk: The planned listing of Cell C is a complex process with significant execution risk. Any delays or failures in this process could negatively impact the share price.
● Market scepticism: The sharp drop in the share price after the good 2025 results indicates that the market is sceptical about the quality of the earnings and the company’s prospects.
● Cell C's financial health: Cell C is still technically insolvent. Its ability to compete effectively in the tough telecoms market remains a big risk.
● Major restructuring hitting Cell C
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** This article was prepared by BROKSTOCK analyst Maboko Seabi
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