XPED Ltd

XPE Details

Organisational re-structure: Share of XPED Ltd (ASX: XPE) tumbled 9.0% on 25 September 2017 post emerging from a trading halt, after the company announced its re-structure plans. XPE announced an organisational re-structure, targeting significantly reduced expenditure and increased efficiency of the Company’s Board and Management. As part of the re-organisation, Athan Lekkas will resign as CEO but will remain a Director, Managing Director Martin Despain and Director Dr Wenjun Sheng will resign from the Board but both remain as Xped consultants, while John Schultz has resigned as a Director. These latest changes follow the appointment of Peter Hunt as Non-Executive Chairman of Xped, as announced earlier this month. The company believes that significant cost savings and business development benefits will be realised immediately by the re-organisation while simultaneously freeing up Athan, Martin, and Wenjun to focus on their critical business development roles within Xped’s operations. The outcome of these changes is anticipated to positively impact the company’s balance sheet this financial year with fixed operating costs reducing by a further $1 million in the current financial year.

The stock has fallen 75% in last six months while it is down 90% in the past one year (as at September 22, 2017), owing to issues regarding costs and payments to suppliers etc. However, the latest restructure and cost reduction plans may bring some turnaround. We maintain a “Hold” recommendation on the stock at the current price of $ 0.01

Chorus Ltd

CNU Details

Traded ex-dividend:Chorus Ltd (ASX: CNU) plunged 4.8% on September 25, 2017 as the group traded ex-dividend while Jo Crawford has been appointed as Acting GM of Customer Care effective immediately. Meanwhile, Chorus’ FY17 results were underpinned by a strong focus on costs as the company streamlined copper provisioning processes and began capitalising labour expenses relating to certain fibre provisioning costs. The group reported a net profit after tax (NPAT) of $113m and earnings before interest, tax, depreciation and amortisation (EBITDA) of $652m. Operating revenue for the period was $1,040m (FY16: $1,008m) and operating expenses were $388m (FY16: $414m). Depreciation and amortisation for the period was $339m (FY16: $327m), delivering earnings before interest and tax (EBIT) of $313m (FY16: $267m). FY17 EBITDA declined relative to adjusted EBITDA for FY16 of $677 million due to reduction in revenue as other fibre companies continued to gain connections in their fibre rollout areas and large vertically integrated retailers began encouraging their customers on to their own wireless broadband networks.

Meanwhile, UFB (ultra-fast broadband) build programme continues at pace and now 70% of the way through the first phase, compared with 57% in the corresponding period. Across the Chorus UFB footprint more than one third have connected to fibre, with 275,000 connections at the end of June 2017. That’s a big jump from 156,000 connections or 24% uptake of last year. During FY17, considerable focus was directed to improving customer experience and Chorus’ fibre installation workforce grew to 615 field crews by the end of FY17, up from 524 crews at the start. They completed 129,000 new fibre connections nationwide, a substantial increase on the 93,000 connections in the previous year. The stock has fallen 16.2% in the past there months while it is up by just 2.8% in the past one year as on September 22, 2017. We maintain a “Hold” recommendation on the stock at the current price of $ 3.54

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