MNF Group Ltd


MNF Details

Growth via acquisitions: MNF Group Ltd (ASX: MNF) reported that the company recently finished the purchase of the US based global wholesale voice business of Telecom New Zealand International, post receiving the US government approvals, from Spark New Zealand for AU$22.0 million or NZ$22.4 million. The group even partnered with Dubber Corporation Ltd via its subsidiary, MyNetFone on offering the world’s first cloud based call recording solution on a large scale to Australian businesses, which uses traditional fixed phone lines like PSTN and ISDN services. On the other side, MNF even delivered an outstanding performance and posted a 177% increase in revenue to $84 million in the first half of 2016 while earnings per share rose by 21% to 6.01 cents against the prior corresponding period (pcp). The first half 2016 performance reflects contribution from TNZI business. MNF expects EBITDA for FY16 to be $17.3 million while NPAT is estimated to be $8.4 million. The group forecasts earnings per share of 12.6 cents (based on forecast weighted average number of shares on issue of 66.8m).
 

Multiplying growth via acquisitions (Source: Company Reports)
 
Accordingly, the stock rallied over 12.39% (as of June 24, 2016) in the last three months placing MNF at higher levels. The stock is trading at an unreasonable P/E with a low dividend yield. Moreover, MNF’s heavy reliance on acquisitions for growth is also a major concern among investors. Based on the foregoing, we given an “Expensive” recommendation on the stock at the current price of $3.97, and would review the stock at a later date.
 

MNF Daily Chart (Source: Thomson Reuters)
 
Superloop Ltd


SLC Details

Strategic investments in Asia: Superloop Ltd (ASX: SLC) stock surged over 29.6% in the last three months (as of June 24, 2016) driven by the group’s efforts to build a 110 km fiber optic infrastructure for internet network across Hong Kong at an investment of $45 million. The project is expected to be completed in December 2016. SLC has also dispatched the letters to the shareholders with regards to the one for seven pro rata non-renounceable entitlement offer of fully paid ordinary shares to raise about A$35.3 million. The group is thus boosting its capital position, and recently finished the placement of shares to institutional investors at $2.1 per share to raise $22.5 million. The stock has risen over 2.9% on June 27, 2016. The international network connecting Australia, Singapore, Hong Kong and US is expected to be completed by June 2016. SLC is raising a total of A$35.3 million for the strategic investments in Asia through the issue of approximately 16.8 million new Superloop ordinary shares (or 12.5% of the ordinary shares on issue after completion of the offer).
 

Entitlement offer highlights (Source: Company Reports)
 
The funds were said to be used towards investment in Hong Kong, TKO Express domestic submarine cable project, expansion of the HK fiber network beyond the initial network, and expansion of the Singapore network. SLC also reported about its expansion plans by connecting four strategic locations including the Singapore Exchange, iO and NTT data centers. On the other hand, the group is aggressively turning to fund the expansions efforts, but investors need to note the current challenging conditions in target markets like China. We believe that the stock is “Expensive” at the current price of $2.48
 

SLC Daily Chart (Source: Thomson Reuters)
 
Vocus Communications Limited


VOC Details

Efforts to expand penetration: Vocus Communications Limited (ASX: VOC) has planned NBN rollout to reach 9.1 million by FY 18, and accordingly, acquired Amcom in July 2015 as well as merged with M2 in February 2016. Vocus & M2 combined group expects to extract synergies of $40 million by the end of financial year 2018. VOC has net leverage of 2.01x and gearing ratio of 17.5% as per first half 2016 which is high, so the company has planned to take group debt refinancing in the near term.


Vocus solid performance (Source: Company Reports)
 
Meanwhile, rumors have been revolving around the stock about buying of NextGen to leverage its infrastructure. The company has entered into new agreements with its executive directors and CEO. On the other hand, we believe that the heavy rally in the stock placed Vocus at a very high P/E. Accordingly, we give an “Expensive” recommendation on the stock at the current price of $8.71
 

VOC Daily Chart (Source: Thomson Reuters)

---

Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in:  BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.