Superloop Limited

 
Superloop Conducting Fully Underwritten ~$92.2 Million Equity Raising:Superloop Limited (ASX: SLC) is primarily into the business of construction and operation of independent telecommunications infrastructure throughout the Asia Pacific region, including the provision of complete high-performance network solutions for wholesale, enterprise and channel customers. The market capitalisation of the company stood at $313.59 million.
 
The company is conducting a fully underwritten equity raising of ~$92.2 million via a fully underwritten two-tranche placement to institutional investors to raise approximately $57.6 million and a fully underwritten 1 for 6 accelerated non-renounceable entitlement offer of fully paid ordinary shares in SLC to raise approximately $34.6 million.The entitlement offer has two components: 1) a retail component (Retail Entitlement Offer), and, 2) an accelerated institutional component (Institutional Entitlement Offer).
 
Financial and Operating Performance of FY19: The company’s total revenue, including other income, increased by 1.4% to $119.8 million. The revenue mix shifted significantly towards the core connectivity segment due to a significant revenue growth on fibre assets, growth in broadband segment, and planned retirement of non-core “Services” products.

The company completed the Asia Pacific core network loop, including INDIGO subsea cable from Singapore to Perth to Sydney, and connecting Australia seamlessly through NBN’s nationwide Points of Interconnect.
 

 
Product Portfolio (Source: Company Reports)
 
Outlook for FY20: The companyhas given new guidance for its FY20 EBITDA. The company expects underlying operational EBITDA (adopting AASB16 from 1^st July 2019) to come in the range of $14 million-$16 million, underpinned by strong growth in core fibre connectivity business, delivering an operating leverage in the future, coupled with a return to growth of complimentary offerings, partially offset by planned further declines in the non-core cloud managed services business.
 
Stock Recommendation: As per ASX, the company’s stock is trading below the average of 52-week trading range. The company has reported an encouraging CAGR growth of 167.82% in its revenue over the period of FY16 to FY19, thus, it can be said that company is growing rapidly. Superloop Limited has a low debt to equity ratio of 0.26x as compared to the industry median of 0.78x. Therefore, considering the above-stated facts, we give a “Speculative Buy” rating on the stock at the current market price of $1.095 per share, up by 5.288% as on 15^th October 2019.
 

Cooper Energy Limited

 
Quarterly Activities Update:Cooper Energy Limited (ASX: COE) is an upstream oil and gas exploration and production company, of which primary function is to secure, find, produce, develop and sell hydrocarbons. The market capitalisation of the company stood at $891.85 million as on 15 October 2019.
 
The September quarter was successful on various fronts as the company reported sales revenue of $22.7 million, up by 21% than the previous quarter due to higher gas production and prices.Quarterly production was up by 22% to 0.39 million boe from the previous quarter’s 0.32 million boe. The upstream Sole Gas project was completed within budget and is ready to supply gas to Orbost plant.

Cash at 30 September 2019 was $166.8 million, compared with $164.3 million at the beginning of the quarter.

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Quarterly Highlights (Source: Company Reports)

New Gas Discovery at Dombey-1DW1: Cooper Energy, which holds 30% interest in PEL 494 (operated by Beach Energy 70% interest) in the Penola Trough, onshore Otway Basin, South Australia, advised that the Dombey-1DW1 exploration well has encountered gas in the primary target Pretty Hill Formation. A gross gas column of 44.5 metres, with an estimated net pay thickness of 25 metres, has been identified with an interpreted gas-water contact in the reservoir. Gas sample analysis indicates a low inert content. Dombey-1DW1 has been drilled to 3,384 metres MDRT as well as formation evaluation is ongoing.

Stock Recommendation: Top-line of the company witnessed a CAGR growth of 22.46% in the time span of FY15 to FY19 and, thus, it can be said that COE is possessing respectable capabilities to garner revenues which might support its long-term growth prospects.

The stock has generated returns of -0.89% and 12.12% in the three months and six months, respectively. Currently, the stock is trading slightly above the 52-week trading range of $0.390-$0.685. Hence, considering the aforesaid facts and current trading levels, we have a wait and watch stance on the stock at the current market price of $0.575 per share, up 4.545% on 15th October 2019.

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