To fund the acquisition of private retail service provider (RSP) Exetel, Superloop has undertaken undertaken a $100m raise and issued $10m worth of stock to the vendor. In addition, management reaffirmed FY21 guidance. Add rating and target rises to $1.33 from $1.27.
The broker highlights the acquisition adds significant scale, generating $150m of revenue and $16m of earnings (EBITDA) on a pro forma, post synergies basis. The latter are considered meaningful with around $2.5m to be realised in FY22 and circa $5m in FY23.
This deal makes strategic sense, adding more traffic and therefore more margin, to the company’s large but underutilised network, explains the analyst.
Sector: Telecommunication Services.
Target price is $1.33.Current Price is $1.04. Difference: $0.29 – (brackets indicate current price is over target). If SLC meets the Morgans target it will return approximately 22% (excluding dividends, fees and charges – negative figures indicate an expected loss).
