5G Networks Limited

5GN Details

5GN Appoints Well Experienced Mr. Glen Dymond As New CFO and Company Secretary: 5G Networks Limited (ASX: 5GN) has an engagement in the supply of cloud-based solutions, managed services, and network services. It also operates its own fibre and wireless infrastructure and manages its own cloud computing environment. The company recently announced the appointment of Mr. Glen Dymond to Chief Financial Officer and Company Secretary. Mr. Dymond has more than 25 years of experience in senior finance and operations management roles at several companies including Spotless Group Limited (ASX: SPO), Zenitas Healthcare Limited (ASX: ZNT), etc.

Q1FY19 Key Highlights: 5G Networks Limited reported decent performance with quarterly cash receipts of $15.4 Mn, which is 8% up as compared to the previous quarter.Its Year to Date cash receipts was reported at $38 Mn, which is a significant increase at eleven times greater than the previous corresponding period.

Its quarterly Operational Cash Flow also increased by 13% to $995k; this result excluded abnormal payments for staff leave entitlements and acquisition costs. Cash Receipts increased significantly, recording $15.4m for the quarter, growing by 8% from the previous quarter. Operating Cash Flow was very positive in achieving a result of $629k. This included $191k acquisition payments and $175k of leave entitlements to several employees who voluntarily left the business during the third quarter. Capital expenditure of $315k for Q3 was driven by customer demand for new services. Its new and retained annualised contracted revenue in Q3 was reported at $6.8 Mn, which demonstrates the success of its sales strategies. During the period, 5GN completed the acquisition of Melbourne Data Centre (MDC) along with the capital raising of $8 Mn.


Cash Flow Data (Source: Company Reports)

H1FY19 Financial Performance:5G Networks Limited’s revenue for the half year period till December 31st was reported at $23.576 million as compared to $1.134 million in H1 FY18. The transition to service-based revenue and the growth in multi-product holdings has contributed to the company’s success.However, the net loss stood at $1.460 million as compared to $0.008million in H1FY18. 


H1FY19 Income Statement (Source: Company Reports)

What To Expect: As per the company’s reports, $8 Mn capital raise provides the flexibility and agility to explore targeted and accretive acquisitions in addition to fund the planned east coast roll-out of 5GN’s fibre network.This will enable 5GN to capture an increased share of growth markets by offering a range of digital services delivered through the targeted expansion of its high-speed infrastructure.

5GN’s nationwide high-speed data network was successfully launched to customers in April 2019.The company supports the digital transformation of customers by offering secure and private access to existing Cloud, Hosting and Data Centre Services. The national network will allow the company to expand its fibre and wireless infrastructure along Australia’s East coast corridor with controlled capital expenditure. Cost reduction and improved profitability will also be realised through the managed migration of customers from 3rd party data links onto the 5GN high-speed private network.

Stock Recommendation: Its revenue for H1FY19 increased by ~1791% as compared to the previous corresponding period. Its EBITDA increased by ~603% as compared to the previous corresponding period. Its ongoing rollout of 5G networks along with few acquisitions are expected to help the company in delivering long term value for its customers and shareholders. Currently, the stock is trading close to its 52-week high level of $1.715. Hence, considering the aforesaid facts and current trading level, we recommend a “Hold” rating on the stock at the current market price of $1.500 (up 1.01% on July 19, 2019).


5GN Daily Chart (Source: Thomson Reuters)

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