NetComm Wireless Ltd (ASX: NTC) is a developer of broadband products for global telecommunication networks with particular expertise in wireless Machine-to-Machine (M2M) and wireless broadband (3G/4G) technologies for consumer, business and industrial applications. NetComm has a P/E of 47.950 and EPS of 0.024 AUD with a market capitalization of $171.21m.
NTC's fixed line products are primarily intended for Australian and New Zealand homes and business to meet the demands for high-bandwidth activities. Company developed a world-leading fixed wireless solution that overcomes the prohibitive costs and complexity associated with Fixed Wireless deployments such as interactive gaming, music and movie downloads, video conferencing, Internet TV and online radio. NetComm Wireless' Fixed Wireless technology is proven to offer the most reliable and efficient solution. The nbn and Ericsson are delivering a world leading fixed wireless service using Wireless Network Termination Devices (WNTD) provided by NetComm Wireless. NTC’s Broadband business is focused on Australia and New Zealand and continues to service long term customer base in their requirements for powerline devices, ADSL and VDSL routers and ADSL filters. The Broadband business segment supplies communication devices, including but not limited to Mobile Internet Gateways, designed and manufactured for use primarily by consumer and small medium enterprises (SME).
As per the half year 2018 results, the group’s revenue was up by 89% to $88.6 million, and EBITDA was up by 13 times to $9.2 million compared with last year. NPAT increased to $3.7 million, compared to prior year loss of $(1.7) million. Strong balance sheet, with net cash of $13.1 million and no debt, were also noted. The half year was a strong period for NetComm as they continued to deliver on their strategic plan. Revenue from the high growth M2M business, which now represents 85% of Group revenue, was up by 107% to $75.1 million. The period also saw revenue from the company’s traditional broadband business recover, to be up 27% as NTC implemented initiatives to reinvigorate that business. Contract with nbn was signed to supply network connection devices for NBN’s Fibre-to-the-curb (FTTC) project. NTC also lately signed a Fixed Wireless Agreement with Bell Canada.
If all is well, then why the stock price plunged about 18.2% in last three months. It seems that NBN’s business decision is impacting the stock. NBN has lately slashed its plans to offer a 100/40Mbps fixed-wireless product. On the other hand, NTC delivered the initial order of fixed wireless units to AT&T in the US for its rural broadband project and its sales presence in key strategic markets including Europe, UK and North America, has been on the uptrend. While the communications equipment company, NTC, might not be impacted much from the nbn move, but given the sinusoidal movement in stock price, we put a “Hold” on the stock at the current price of $1.17.
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