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Why MNF Group Ltd just flagged 24% profit growth in FY 2018

Online voice communications business MNF Group Ltd (ASX: MNF) held its AGM in Sydney this afternoon during which its founder and CEO Rene Sugo forecast that the business could deliver profit growth of 24% over the current financial year.

The profit growth is expected despite the business continuing to invest in its technology development for new platforms to “deliver strong growth well into the future”.

MNF is growing its online voice communications business across the Asia Pacific region thanks to investments made over the past 18 months.

It also provides online communication services to Australia’s government sector and is growing customer numbers across the public and private sectors.

In total it’s forecasting earnings per share to come in at 20.5 cents over FY 2018 which would represent growth of 18% and place the group on around 27x forward earnings when selling for $5.64. Notably, the forecasts look conservative based on 100% organic growth only and excluding the potential impact of major new client wins or any acquisitions.

The group’s balance sheet remains in decent shape and this looks a high-quality small cap expertly managed in the fast-changing technology sector.

MNF Group shares are up 561% over the past 5 years and may have a strong 5 years ahead of them.

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Motley Fool contributor Tom Richardson owns shares of Cochlear Ltd., MNF Group Limited, and REA Group Limited.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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