Great results for Vocus Communications
Vocus Communications Limited (ASX: VOC) reported its half year results last Friday. Those who have kept track of the firm will recall it’s medley of acquisitions over the past year. Vocus is now essentially 5 businesses in one (Vocus, Amcom, FX Networks, M2 Telecommunications & Call Plus).
The firm currently reports as the former 3 with the latter 2 on schedule to be consolidated into the accounts at financial year end.
Below is a summary of our notes which we hope you’ll find useful.
Vocus/FX Networks/Amcom
- Good result, revenue up 181% (132% due to Amcom, the remainder growth via organic Vocus/FX Networks growth).
- F&E growth driven by an increasing number of buildings signing up for the Vocus network (referred to as on-net buildings or ONB’s). Management noted that the run rate has increased to 60 ONB’s per month with more to come.
- EBITDA margins for the group look flat (circa 35%), but given Amcom’s historical EBITDA margins were 26% and Vocus’ were 35%, upon consolidation you would have expected a fall in overall margins, meaning that underlying margins in the firm are continuing to expand.
- Management has provided group guidance of $373m EBITDA for the full year (MIMe: $361m).
MTU/Call Plus
- PCP revenue growth of 29.5% boosted largely by Call Plus ($121m of 1H16 revenue), underlying growth was circa 7%.
- Broadband subs up 22k, well ahead of market expectations (10k). Whilst below our expectations, the miss is immaterial to our valuation. 40k subs are now on the NBN.
- Management reiterated guidance of 35% NPAT growth for FY16 (circa $100m).
Scott Shuttleworth is an analyst at Montgomery Investment Management. To invest with Montgomery domestically and globally, find out more.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
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Bruce Gleeson
:
Hi Scott – further to your update in late Feb 16, just curious as to what your thoughts are about the NextGen acquisition, how the EOY results might be looking and the capital raising?
Dylan
:
Thanks Scott,
I agree great set of numbers it looks like the business will benefit greatly from these acquisitions..
As not all businesses are merged into these results I would be interested to understand if Montgomery believes there is further upside through these business and new valuations for the stock?