Amaysim Australia Limited (ASX: AYS)
Diversification Strategy: Amaysim’s share price tanked 21.5% on February 08, 2018 as the group announced its first half 2018 trading update. While, there was an increase in subscribers’ base across all the verticals which was driven by net revenue growth initiatives that included new product launches, the refreshed mobile product suite and successful marketing campaigns, there was a 7% drop in mobile net revenue (excluding devices) due to a reduction in mobile ARPU (average revenue per user). On the other hand, mobile subscribers base grew by 10% and came out to be 1.127 million as on 31 December 2017. It was achieved despite an increased competition and the shutdown of the Optus 2G network in August 2017.
After launching nbn plans in the second half of 2017 financial year, the broadband business achieved a solid growth in line with the management expectations. The energy business also experienced a strong growth in the first half of 2018 with approximately 185,000 subscribers as on 31 December 2017. The group will release its finalised 2018 first half financial year results pre-market open on 26 February 2018. Its focus on top-line growth, cross-selling products to its subscriber base and on increasing the share of the household wallet remains unchanged.
Given the completion of diversification strategy and key strategic investments for business growth, AYS aims to achieve a net revenue of approximately $292-$294 million in the first half of 2018. It is expected that the underlying EBITDA will be approximately around $17-$18 million. An additional $6 million receivables which were related to the first half will be reported as the subsequent event in 2018 half year accounts. This is nonetheless better than first half 2017 results, while being slightly short of market expectations. Though we do see an opportunity here given the potential and share price fall after a huge run-up in the past few months; however, looking at the sudden slump, we give a “Hold” recommendation on the stock at the current price of $1.75
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Financial Performance (Source: Company Reports)
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