MultiChoice (MCG ZA)

MultiChoice is a South African-based media company that provides digital satellite television Direct to Home (DTH) and digital terrestrial television (DTT) services, as well as online Video on Demand (VOD) solutions. Apart from stakes in MultiChoice SA and MultiChoice Africa, it also owns Irdeto and Showmax.

MultiChoice is one of the world’s fastest growing pay-TV and video entertainment operators, with a competitive content offering and growth potential from subscriber growth and pay-TV penetration in Africa. MCG’s three content pillars, international, local, and sport, continue to hold a competitive advantage even as competition continues to rise.

We reiterate our idea for MCG dated July 2022. Technically, a price that remains in a symmetrical triangle pattern makes the share attractive as an investment opportunity (see the black converging trendlines on the main chart as well as the insert). While the triangle is neutral, it still favours the direction of the existing trend. The expectation is for the price action to progress to the upper range of this pattern.

According to the RSI (Relative Strength Index), the share will be overbought at R175, making our profit target of R153 realistic. Still, the trade idea is regarded as a countertrend trade since the price remains below its 200-day simple moving average of R122.

We suggest a low capital at risk allocation to this trade.