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SLC - SUPERLOOP LIMITED


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​Highlights:

● H1 FY21 EBITDA of $8.2m, 99% growth PcP.

● Total group revenues of $53.3m, with core connectivity recurring revenue up 30% PcP.

● A multiyear major contract win for Superloop nbn Aggregation Services via our inhouse Superloop Connect Platform with an anticipated contract value of ~$25m.

 

● Superloop Home Broadband subscribers totalling 39k as at 31 December 2020, growth of 66% PcP.

● On going prudent capital expenditure management with spend of $8m for the period (H1 FY20 $12m) excluding IRU swaps.

● Re-affirming EBITDA guidance of $18m - $20m, with latest expectation bottom end of the range primarily due to continuing but temporary implications of COVID on Education and Hospitality sectors.

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  • 3 months later...
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Superloop will acquire Exetel, Australia’s largest independent internet service provider, for $110 million, comprising $100 million in cash and $10 million in Superloop shares.

 

The acquisition is estimated to have cost synergies of $5 million annually, related to the increased Superloop network utilisation, with all synergies expected to be realised within the first 12 months. Superloop said the transaction would be materially accretive to key financial metrics including EPS, EBITDA and FCF on a FY21 pro-forma basis.

 

The acquisition will be funded by a fully underwritten institutional placement of $49 million and a pro-rata accelerated non-renounceable entitlement offer of $51 million to raise gross proceeds of $100 million. One new share for every 6.67 held, at 93c.

 

 

The acquisition of Exetel, Australia’s largest private ISP, adds significant scale to grow profitable share of our three customer segments, said Superloop chief executive Paul Tyler,

 

Integration of Exetel into Superloop’s existing networks brings super fast, super easy & super reliable connectivity to three times more homes and businesses.

 

Superloop adjusted its 2021 financial year EBITDA guidance at a tightened range of $18 million to $18.5 million (excluding one-off transaction costs). That is at the lower end of its previous guidance of between $18 million and $20 million.

 

 

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  • 3 weeks later...

the trading in SLC during the rights period has seen it drop to 90c. I guess a deal has to be made when the opportunity arises, but as SLC has been higher than the 93c issue price , going as high as $1.20 within the past 12 months, then it might be expected to have an element of tax loss selling in the mix when the action takes place close to end FY.

 

 

And, of course, it may just be seen as being a poor deal. Do we really need another small ISP?

With 2 days to go, it is now trading at or above the 93c uptake level.

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and lo and behold; 30% uptake by retail. ... shortfall placed ....

 

Retail Entitlement Offer closed on 29 June 2021, raising ~A$21.2 million. Approximately 22.8 million New Shares will be issued under the Retail Entitlement Offer on 6 July 2021.

 

Eligible retail shareholders applied for ~A$6.3 million in New Shares (including applications under the top-up facility).

 

There was a shortfall of approximately 16.0 million New Shares (~A$14.9 million) between the number of New Shares subscribed for by eligible retail shareholders and the number of New Shares offered under the Retail Entitlement Offer, which have been allocated to sub underwriters of the Retail Entitlement Offer in accordance with the terms of sub underwriting agreements.

and trading back above 93c

 

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  • 5 weeks later...

SuperLoop has not been trading above the 93c paid in the placement and rights issue.

Now the acquisition is complete, we should hope the transformative opportunities offered do come about:

..... Accelerates utilisation of infrastructure assets, scaling its consumer & business customer segments, delivering increased financial scale and market relevance

..... Network integration planning largely completed, on track to fully deliver the identified cost synergies of at least $5 million per annum within the next 12 months.

..... Scales profitable market share across our three customer segments of consumer, enterprise and wholesale. With ~110k incremental business & consumer customers, enhanced EBITDA, balance sheet capacity and richer product set.

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  • 4 weeks later...

It did trade as high as 97c in the days leading up to the results, but has dropped back to that 93c level as the day wears on.

The Superloop networks are strategically positioned to capitalise on market dynamics, driven by strong data growth, growth in data centre demand and the need for connectivity services with a focus on the Asia Pacific region.

 

Network coverage across the Asia Pacific region, combined with the INDIGO subsea cable system, along with a standardised and scalable suite of connectivity solutions including broadband and cybersecurity, provide trusted and reliable services to a broad range of customer segments.

The Group is focused on monetising these assets and increasing utilisation to deliver a return on investment to shareholders. The Group will continue to invest in connectivity solutions in markets where the Board and Management believe the demand for services will deliver an attractive return for Shareholders.

Highlights:

● Achieved EBITDA of $18.2 million excluding acquisition costs ($13.5 million in FY20) and $110.7million of total Group revenues ($107.6 million in FY20).

● Underlying revenue growth of 14%, with underlying EBITDA more than doubling at 108%.

● Core fibre connectivity revenues (excluding design & construction revenue) up 22% year on year to $46.0 million.

● Continued strong fibre connectivity recurring revenue sales trajectory, with 27% yoy growth.

● Consumer Home Broadband subscriber growth of 62% year on year.

● Operating expense reduced 17% yoy, capital expenditure stable at $14.6m (excluding leases & IRUs).

● Enhanced balance sheet strength, with the Group achieving Free Cash Flow breakeven for the year.

 

 

......... and I notice both ARG and MIR taking positions in SuperLoop. Probably in the long term, and triggered by achieving Free Cash Flow hurdle?

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  • 3 weeks later...

Superloop founder and chairman Bevan Slattery has resigned, effective from November 2, and the company will replace him with former Amaysim boss Peter O'Connell. Superloop chief executive Paul Tyler said the entrepreneur had thought about leaving to pursue other ventures for some time, and with the company breaking even on a cash flow basis in the 2021 financial year he reckoned there was now enough momentum behind the business to safely head for the exit.

 

It really doesn't need his personal involvement now. He is staying in the stock. He is not selling his shares ... it's just that he has other things he wants to put his personal attention to and the time is right, Mr Tyler said.

Mr Slattery owns just under 18 per cent of Superloop worth $66 million, and his exit marks the end of a leadership transition that began with Mr Tyler's appointment as CEO a year ago

The business is in a fundamentally different shape than what it was even as recently as a year ago, Mr Tyler said. The build phase is largely completed, and we are seeing strong organic growth in our segments.
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  • 1 month later...

Superloop has been traveling sideways. They built a network but not enough people have come.

Examination of utilisation rates  in the latest Investor Updates show the Asian hubs of Hong Kong especially and Singapore bumbling along on low percentage uptake. This news today may make it all better:

Quote

Superloop announced it has entered into a binding agreement with funds affiliated with Columbia Capital and DigitalBridge Investment Management, the investment management arm of DigitalBridge Group, Inc. (NYSE:DBRG)  to sell Superloop (Hong Kong) Limited and certain select assets from Superloop (Singapore) Pte Ltd for A$140 million.

The sale price represents a 30% premium, or A$32 million above the A$108 million carrying value of the assets today. In connection with the sale, Superloop will maintain operations in Singapore and Hong Kong and enter into a 15 year Indefeasible Right of Use (IRU) on the existing or future expanded Singapore and Hong Kong networks. This allows the company to continue to participate in these markets and provide end-to-end connectivity services to Superloop’s INDIGO submarine cable (INDIGO) customers in the region.

not the best outcome for investment effort, but now they should focus on Australia (or get taken over?)

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  • 1 month later...
On 10/18/2021 at 9:44 AM, nipper said:

Superloop has been traveling sideways. They built a network but not enough people have come.

Examination of utilisation rates  in the latest Investor Updates show the Asian hubs of Hong Kong especially and Singapore bumbling along on low percentage uptake. This news today may make it all better...

....... and there was an immediate jump on the earlier news, from that 97c level to around $1.20 and getting to $1.30 within a few days. Trading and it settled down a bit, and today up 5c to $1.25. Maybe the brokers having a look over have spurred a revisit?

Morgan Stanley says a leadership renewal, divestment of non core assets, balance sheet repair and the acquisition of Exetel have laid the groundwork for a turnaround story at Superloop.

The broker upgraded its rating on the communications company to overweight and increased its price target by nearly 40 per cent, to $1.45, from $1.05.

Morgan Stanley analysts said the company was gaining market share in the telco space and its medium term target of doubling revenue share to 4 to 5 per cent, from 2 per cent today, was highly achievable.
 

Quote

Superloop has the potential to be a fast growing telco challenger by taking share from incumbents, said Morgan Stanley analyst Joseph Michael. The path to balance sheet repair is clear after divesting assets in Hong Kong and Singapore. A net cash position gives Superloop optionality to accelerate organic growth, pursue further highly accretive M&A or return cash to shareholders.

The broker said it believed Superloop could generate EBITDA margins of 20 per cent on revenue of $500 million, supported by gross margin expansion and fixed cost leverage. In 2022 it is expected to deliver EBITDA margin of 10 per cent.

Morgan Stanley said the new leadership team would also offer a clearer strategy on increasing shareholder value. Under its previous management teams, the company had a history of missing market expectations on organic growth and M&A.

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