The Amaysim Australia Ltd (ASX: AYS) share price has been a big mover in morning trade following the release of its full-year results.
At the time of writing the fledgling telco company's shares are up almost 6% to $1.76.
Here are key takeaways from FY 2017:
- Net revenue increased 29% to $326.7 million.
- Statutory gross profit up 16% to $99.1 million.
- Underlying NPATA up 16% to $25.2 million.
- Underlying earnings per share flat at 11.3 cents.
- Final dividend of 5.1 cents per share fully franked, bringing full-year dividend to 9.1 cents.
- Mobile subscribers increased 11% to 1.074 million.
- Mobile average revenue per user (ARPU) down 11% to $22.46.
- Group mobile average monthly churn down 50bps to 2%.
- Outlook: Well-positioned for continued growth in FY 2018.
Overall I felt this was a bit of a mixed result from Amaysim. While the top line growth and its 11% increase in subscriber number were impressive, its weakening margins were a touch disappointing.
These were partly down to the strong mobile gross margin it achieved in FY 2016 and the inclusion of inclusion of the newly acquired Click Energy.
But while the Click Energy acquisition may have weighed on its results this year, management expects it to be a different story in FY 2018.
According to the release, the acquisition is expected to be over 20% earnings per share accretive in FY 2018 on an underlying NPATA basis, post-cost synergies and before transaction and integration costs.
Another decline that investors may have concerns about is its ARPU. But it is worth noting that the decline in ARPU was widely expected due to the impact of product initiatives undertaken to grow subscribers in FY 2016.
Pleasingly, ARPU started to increase again during the second-half of FY 2017. As a result, I expect to see improvements in this metric next year.
Another thing to look out for in FY 2018 will be its Broadband business. In May the company took on the likes of Telstra Corporation Ltd (ASX: TLS) and TPG Telecom Ltd (ASX: TPM) by launching low-cost unlimited Amaysim-branded NBN plans.
The early progress has been to expectations and management appears confident on its future prospects. And with over 800,000 households in its mobile business creating significant cross-sell potential, it's not hard to see why the company is so optimistic.
Should you invest?
The telco space is certainly a difficult place to invest at the moment due to the NBN rollout.
But at around 15x earnings I feel Amaysim does represent one of the better options in the industry. Especially with its reasonably diversified business and strong subscriber growth.
