Superloop rallies on back of maiden profit

By Trevor Hoey. Published at Aug 20, 2018, in Special Reports

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.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of Maven Capital Pty Ltd (AFSL No. 418504). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

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