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MTU, M2 TELECOMMUNICATION GROUP LIMITED
Optionsman
post Posted: Nov 20 2014, 11:40 PM
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In Reply To: nipper's post @ Nov 20 2014, 06:57 AM

Thanks Nipper. Did some digging today and so convinced myself to grab a few. Hopefully the trend has a bit left in it...

 
nipper
post Posted: Nov 20 2014, 06:57 AM
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In Reply To: Optionsman's post @ Nov 19 2014, 11:43 PM

6 days ago
QUOTE
Credit Suisse rates MTU as Outperform

- The broker was positive walking in to M2's AGM and even more positive walking out. New distribution channels set the company up for the potential acceleration of subscriber growth late in FY15 and on to FY16 and beyond, the broker suggests.

- While most of M2's growth over the past 18 months has come from Dodo, management also presented a compelling growth story for Commander.

- An FY15 PE of 14.9x is not demanding for a stock forecast to generate around 16% annual compound growth, the broker believes. Target rises to $9.35 from $8.07

- CS forecasts a full year FY15 dividend of 31.20 cents and EPS of 54.40 cents . At the last closing share price the estimated dividend yield is 3.83%

Telco sector's quiet achiever
QUOTE
M2 Group chief executive Geoff Horth runs one of Australia's quietest success stories. The Melbourne-based telecommunications provider is best known as the owner of household names including Dodo, iPrimus and Commander. It has enjoyed a meteoric rise by buying its rivals to become a $1.5 billion giant. In an extensive interview with The Australian Financial Review, Mr Horth said his goal was to make M2 one of the largest consumer internet service providers in the country with a double-digit percentage market share – up from the circa 6 per cent it currently holds. This will be done using the Dodo brand it bought in 2013 for $250 million.

The company struggled for much of the year to convince shareholders it had shaken its reliance on using acquisitions to grow revenue and profits, having completed over 20 in the last five years alone. It recently stepped out of the race to buy energy reseller Lumo when the price got too hot.

"But our overall business did not do a transaction in financial year 2014 and yet for 2014-15 we're guiding for 8 to 9 per cent revenue growth, which, from a billion-dollar revenue base, is not trivial," Mr Horth said. "That'll drive 15 to 20 per cent net profit growth. "We want to remove once and forever the question of whether our business can grow organically and we don't see any reason why we can't continue this growth rate for many years to come."

M2's low-cost products face a huge amount of competition from rivals like TPG Telecom, which get higher margins thanks to their ownership of infrastructure like fibre optic cabling. iiNet is also gunning to ramp up sales in the small to medium business segment M2's Commander brand has typically enjoyed.

Mr Horth said his organic strategy hinged on two key pillars – bundling energy products into telco offers and building the broadband subscriber base. "Energy is a highly, highly strategic part of our business," he said. "It's a $53 billion category and we've got $100 million of it today. It'd be very difficult to justify our new Dodo kiosk strategy without an energy product because we wouldn't be making enough sales."

Getting products into the market is an area M2 will improve through acquisitions and new retail stores, Mr Horth said. Dodo aims to have 40 kiosks in centres across Australia selling internet, mob­ile and power products in early 2015, with some operating by Christmas.

"The retail strategy is a core ingredient for our growth in the medium term," he said. "It won't pay dividends in 2014-15 or frankly 2015-16 materially, but it's about recognising that if we have hundreds of these things in three to four years' time, they'll be the things delivering the next stage of growth."




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
Optionsman
post Posted: Nov 19 2014, 11:43 PM
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In Reply To: nipper's post @ Apr 22 2013, 09:18 AM

Missed this breakout back in August angry.gif

Is it too late to get on the latest breakout above $8??

 
nipper
post Posted: Apr 22 2013, 09:18 AM
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In Reply To: nipper's post @ Apr 19 2013, 10:48 AM

QUOTE
iiNet and M2 Telecommunications engaged in serious merger talks last year as part of an audacious plan to create a new, multibillion-dollar force in the broadband market, ahead of the arrival of the NBN. The two second-tier telecommunications providers, whose financial profiles are remarkably similar, explored a "merger of equals", under which a newly listed entity would be created to acquire both companies, without paying a premium to shareholders.

A takeover of M2 by iiNet was also given some consideration, but the reverse was ruled out, because of the presence of TPG Telecom on iiNet's share register, with a 7.25 per cent blocking stake. The merger talks were ultimately shelved.

It is understood the discussions, which took place in late 2012, were led by Goldman Sachs, which advised M2 Telecommunications on its recent $230 million purchase of Eftel and Dodo and its $192.4 million purchase of Primus last year. However, at least one other investment bank, believed to be UBS, is understood to have pitched the idea to both companies.

iiNet chief executive Michael Malone and M2 Telecommunications executive chairman Vaughan Bowen are considered friends in the close-knit telecommunications industry. The two entrepreneurs are of a similar age and their careers have followed similarly meteoric trajectories.

Both companies have been enthusiastic participants in the consolidation that has swept through the sector in recent years, in anticipation of the levelled playing field of the NBN. iiNet most recently bought Internode for $105 million in late 2011.

A combination of the two companies would benefit from increased scale and would carry strategic rationale: iiNet has historically focused mainly on the consumer market, while M2's domain has traditionally been among SMEs.

Sources said that a lack of obvious ­synergies was one reason why the talks were abandoned. However, they said strategic discussions could be revisited if M2 shows progress on the integration of its recent acquisitions, or if a valuation gap between the two companies share prices emerges.
from the AFR today



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Apr 19 2013, 10:48 AM
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QUOTE
M2 Telecommunications (MTU) looks like a real puzzler as far as analyst perception goes. The stock is covered by three major Australian brokers and each one has a different recommendation. Boutique broker Moelis, on the other hand, has a very clear opinion and it is positive. Looking at broker positions from least favourable to most favourable will give us a good picture as to what analysts have to say about the stock. CIMB Securities sits at Sell and one of the main issues the broker has is the recent acquisitions undertaken and the difficult job it sees in these being brought effectively into the company.

MTU advised last month it is buying Dodo Australia and Eftel, both resellers in the telecommunications marketplace. CIMB thought the announced acquisition prices were reasonable, but suspects the company will have its work cut out consolidating these acquisitions. CIMB believes the deals will add to costs in FY13 and may add a risky $50m to earnings in FY14.

The crunch for CIMB in terms of valuation is whether the expanded scale and scope of the company has become sufficient to add more value than the amounts paid by M2. It's this unanswered valuation question and the uncertainty it causes that keeps the broker at Sell.

Macquarie admitted it was surprised by the deal for these two consumer companies and is torn by between the opportunistic upside offered by these acquisitions and the need to develop a more sustainable business.

The broker explains the company's traditional focus has been on the small-medium business market. That being said, Macquarie does admit the deals provide an extra stream in the growth strategy over the next two years. But longer term, the broker believes the company will need to become more focused on delivering what is more meaningful organic growth. Torn between earnings upside and longer term potential, the broker sits at Hold.

Citi, on the other hand, saw the move as a good way to provide some nice diversification and a good entry into low-cost retail via Dodo. Between the two, the broker thinks the company should see about $50m uplift in operating earnings by FY14. The other nice thing is that there is barely an impact on gearing.

Yet while Citi point outs the diversification does lower risk, it also detracts from management's focus on the higher margin, core SME business. The broker really hasn't come to an opinion as to whether this is a good move or not and intends to reserve its judgment until it understands the Dodo and Eftel businesses a little better. In the meantime, the broker sticks with its Buy call

That brings us to Moelis, who chimed in on the stock yesterday. The Eftel deal has reached better than 90% acceptance and with the Dodo sale subject to a binding arrangement, both are now pretty much done deals, reports the broker.

Moelis sees a pretty good return, noting the $248m spent will deliver better than $400m in revenue, add better than $50m in operating earnings and add 20% to FY14 EPS. While, like Citi, the broker hasn't come to a conclusion about the strategic shift from a pure SME business focus, it is happy to wait and see given the near term upside that has been acquired.

The broker also sees plenty of potential for better than expected integration savings, noting management's solid track record in generating scale-driven savings in data costs. The broker sees this delivering some robust margin expansion.

Much like Macquarie, Moelis is concerned about the company's ability to maintain organic growth as it beds these acquisition down. The difference is, Moelis thinks there will really be no change in the company's general direction, with the SME sector performance underpinned by the company's Commander brand which continues to chip away at Telstra (TLS).

All up, Moelis thinks the company boasts the least demanding metrics amongst its peers and with integration savings more than offsetting consumer competitive pressures, we should be seeing share price upside soon. This should be driven both by EPS growth and incremental PER expansion as the upside from these two acquisitions start to flow though, predicts the broker.

Moelis has set a target price of $6.40 on MTU while the consensus target in the FNArena database sits at $4.77 between the three brokers covering the stock. The spread is significant, from CIMB at $3.87 to Citi at $5.53. On the wide spread of forecasts, the database shows an average forecast yield of 4.1% for FY13 and 4.9% for FY14.




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: grevillia  
 
daggie
post Posted: May 8 2012, 04:47 PM
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In Reply To: arty's post @ May 8 2012, 02:12 PM

Hello Arty, I have been looking at MTU and FA seem OK. Now you are saying it might be OK, so maybe good time to buy. Thanks for your lovely drawings, I meant charts.

 

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arty
post Posted: May 8 2012, 02:12 PM
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Supported at 1-year EMA (yellow line) and broken out of the falling envelope.
Good buy if break of $3.11 holds firm.

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I trade daily, but I am not a licensed adviser. Whether you find my ideas reasonable or not: The only person responsible for your actions is YOU.
I follow two rules: (1) There are no sacred truths. All assumptions must be critically examined. Arguments from authority are worthless. (2) Whatever is inconsistent with observed facts must be discarded or revised. We must understand the Market as it is and not confuse how it is with how we wish it to be. (inspired by Carl Sagan)
 
simonk83
post Posted: Nov 24 2009, 11:28 AM
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MTU made the 2009 Deloitte Technology Fast 50 (came in at number 9) today. Just hit $1.80.

 
simonk83
post Posted: Nov 23 2009, 02:14 PM
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Now at $1.75. Hopefully someone actually read the MTU thread a month or two ago and hopped on board :D

 
simonk83
post Posted: Oct 28 2009, 03:18 PM
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In Reply To: simonk83's post @ Oct 7 2009, 10:16 AM

Closed at $1.54 today. Intersuisse have it as one of their preferred stocks smile.gif

 
 


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