Superloop rallies on back of maiden profit

By Trevor Hoey. Published at Aug 20, 2018, in Features

Name: Superloop Ltd (ASX:SLC)

Market Capitalisation: $530 million

Opening Share Price: $2.46

Superloop achieved its first positive full year net profit with $7.1 million representing a significant turnaround from the previous year’s loss of $1.2 million in fiscal 2017.

Underlying EBITDA up 240% to $30.6 million (FY17: $9.0 million), with Australia (after one-off items), Singapore and Hong Kong networks all achieving positive EBITDA before allocation of corporate overheads.

Superloop+ (previously Cloud & Managed Services) revenue was up 68% to $36.6 million reflecting the contribution for the full year from former ASX listed telco, BigAir’s “CMS” business.

Superbb (broadband services) revenue was up 286% to $26.7 million reflecting a full year contribution of $12.8 million from Campus Broadband Solutions.

NuSkope which has been operational since October 2017 and GX2 Technology (operational since 17 November 2017) contributed revenues of $6.7 million and $7.1 million respectively.

Operating cash flow was also healthy, with positive cash inflows of $37.9 million in fiscal 2018 well ahead of the $4.7 million generated in fiscal 2017.

Whether it can keep this up remains to be seen, so investors should seek professional financial advice if considering this stock for their portfolio.

INDIGO ahead of schedule

The strong operating cash flow supported further investment in the group’s network and infrastructure with $46.6 million invested in property, plant and equipment, including $18.9 million for SubPartners’ share of construction costs for the INDIGO subsea cable systems and a payment of $21.8 million for long-term network and capacity access agreements.

Management said that the INDIGO project could be completed ahead of schedule.

On this note, Chief Executive Drew Kelton said, “Construction of one of our biggest infrastructure projects, the INDIGO international subsea cable system, is progressing ahead of plan, and subject to weather conditions could be completed ahead of schedule and before the end of this financial year.

“Once complete, Superloop will be able to offer its customers a fully meshed pan-Asian network, and position the company for substantial growth in the years ahead.”

With a strong operational performance and positive outlook statement, the market appeared to view the results positively as the company’s shares rallied more than 10% in the first 15 minutes of trading.

The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

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