Superloop Shares

Superloop shares over the past 5-years have massively underperformed the market, losing 68% of their value. However, the company just released their FY21 results to the market with a 108% increase in Underlying EBITDA, so we take a look under the hood.

Should I Buy Superloop Shares – About

Superloop is an independent fibre infrastructure provider designing, constructing and operating networks throughout the Asia Pacific region. SLC are building critical core infrastructure for wholesale carriers and global content providers who require infinitely scalable and reliable connectivity.

The group operate in Australia and South East Asia providing one of the only direct connections between Singapore and Perth, the group also directly connect Hong Kong and Japan through their FIBRE network in Sydney.

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Should I Buy SLC Shares - Operating Regions
Should I Buy SLC Shares – Operating Regions

Should I Buy Superloop Shares – Price

Over the past 12-months, Superloop shares have traded between a range of $0.8383 – $1.085 with shares now trading in about the middle of the range at $0.955 per share and a market capitalisation of $480million.

SLC Share Price ASX Facts (ASX:SLC)

Market Capitalisation$480,896,061
Share Price$0.955 per share
P/E Ration/a
EPS-$0.087 / share
Should I Buy SLC Shares Price Facts

The company currently does not make a profit and hence do not have a PE ratio and a negative EPS at -8.7 cents per share.

Should I Buy SLC Shares Investor Sentiment

After surveying 163 Investors about their current SLC sentiment: BUY-HOLD-SELL as well as their target price over the next 12-months here are the results;

Prophet Community Investor Sentiment Superloop Shares
Prophet Community Investor Sentiment Superloop Shares

The results from this survey show there is currently a strong HOLD investor sentiment on the SLC share price. The Consensus from the Prophet community survey was an average price of $1.07, which indicates the community is expecting the price to sit slightly higher from here over the medium term.

So how much are Superloop shares worth? Let’s get into it.

Should I Buy Superloop Shares – FY21 Annual Report

Superloop released their FY21 results to the market on the 24th August 2021, headline results look impressive with a 108% increase to underlying EBITDA, 14% increase to underlying revenue and the group achieving a free cash flow breakeven result over the period.

Headline Results for the Superloop FY21 Results Announcement:

  • Achieved EBITDA of $18.2 million excluding acquisition costs ($13.5 million in FY20) and $110.7 million 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% year-on-year growth.
  • Consumer Home Broadband subscriber growth of 62% year-on-year.
  • Operating expense reduced 17% year-on-year, capital expenditure stable at $14.6m (excluding leases & IRU’s).
  • Enhanced balance sheet strength, with the Group achieving Free Cash Flow breakeven for the year.

One of the large indicators we were looking for from the FY20 annual report was an increased growth rate in the groups Asia Pacific Core Fibre Network. This segment grew over 30% between FY19 and FY20. However, the growth rate into FY21 seems to have slowed to around ~20%.

Historical Performance of Connectivity Business Segment
Historical Performance of Connectivity Business Segment

SLC Shares – FY21 Income Statement

Superloop during FY21 produced revenues of $110.5 million which was a 14% increase on the prior comparable period. Total expenses were similar to FY20 at around $93million. Due to the higher revenue and similar cost base SLC was able to increase statutory EBITDA to $17.6million, which is up from $13.4million in the prior period.

Superloop Shares FY21 Income Statement
Superloop Shares FY21 Income Statement

SLC Shares – FY21 Balance Sheet

Superloop as of 30th June 2021, held $89.7million in cash and cash equivalents and a total of $110 of current assets. The group’s cash position increased significantly in the year up from $17million in the PCP. The cash position grew largely as a result of the group $76million equity raise (net of fees), with a remaining $21m to be settled in July 2021.

Superloop FY21 Balance Sheet
Superloop FY21 Balance Sheet

Superloops Total equity grew to $431million which was up from $394million in the previous year. This leaves the group with a net tangible asset per share of $0.46.

The total debt to equity ratio for the group is $431million in equity vs $56million in debt, giving a debt/equity ratio of 13%, this is considered decent for a telecommunications business.

Superloop Dividends

Superloop does not currently pay a dividend, however, have previously paid a dividend back in 2017.

Ex-DateAmountFrankingGrossTypePayable
01/09/2017$0.005100%$0.0071Final18/09/2017
Superloop Dividend History

We do not expect Superloop to be paying a dividend in the short term. However, if the group manages to significantly increase their free cash flow this may be on the cards.

DPS(TTM)$0.00
Gross DPS(TTM)$0.00
Dividend yieldN/A
Gross yieldN/A
Payout Ratio
DRPNo
DRP Features
Superloop Dividend Information

Should I Buy SLC Shares – Fundamentals

Superloop is the 452nd largest company by market capitalisation on the ASX with a market cap of just over $450million. The group has an NTA per share of $0.46 and a negative price to earnings ratio.

Shares Issued483,312,624
SectorTelecommunications
Share Price$0.955
Market Capitalisation$480,896,061
EPS-$0.087
DPS$0.00
NTA per share$0.46
Price/EarningsN/A
Price/Book1x
Volume (4w avg)1,903,534
Superloop Shares Fundamentals

Their Net Tangible Assets per share is $0.46, representing ~50% of the current share price. In comparison to say Commonwealth Bank, which has ~37% of their share price in NTA. The group also have a price to book ratio of 1x which seems to indicate decent value based on the value of their underlying book value.

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SLC ASX Ownership and Recent Insider Transactions

SLC Shares are owned majority by Institutions, the general public and individual insiders at 28.6%, 55.7% and 14% respectively. 

Individual insider ownership is at what we consider to be the mid-range for a company in the sector at 14%.

Should I Buy SLC Shares – Ownership Breakdown

Superloop Chairman and Founder of ASX listed NextDC Bevan Slattery owns 13.1% of the company, which accounts for a significant portion of the individual insider share of the business.

It appears that Bevan Slattery last purchased shares on market at around $0.89 per share buying around $275,000 of the companies stock. Potentially Beven sees some upside to the share price from here?

Should I Buy Superloop ASX Shares – Prophets Take

Superloop seems to have decent fundamentals having a strong balance sheet with about 3 years of cash runway based on the current expenditure. If the group can continue to grab market share away from the NBN and provide a fast and competitive product the company should do well.

The group also plans to capitalise on their acquisition in Exetel to build a mobile network on top of the Telstra networks releasing on Aug 21. However, we can’t see any meaningful increase in EBITDA from a deal such as this.

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Whilst the company does not yet currently make a profit, the business seems to be in decent shape. Chairman Bevan Slattery owns approx 13% of the company and purchased his last set of shares on market at a price of around $0.89 per share.

We will be sitting on the sideline on Superloop shares, for the time being, Prophet has previously owned shares in the company. However, we want to take time to assess how things are going at the next update prior to any further consideration. We would like to see improving metrics on the below prior to any further consideration

  • Maintain cash flow positive position for FY22
  • Increased focus on strategy and unlocking asset value
  • Successful implementation of the Exetel business into SLC with efficiencies realised.
  • Growth of the east asia core fibre network and expansion of revenues associated with the segment.

Should the company be able to execute the above, we will re-assess the company again.

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