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MNF Group Ltd (ASX:MNF) share price rises 3% on acquisition confirmation

The MNF Group Ltd (ASX: MNF) share price was up 5% at one point today, but it’s currently up 3.2%.

MNF has recovered strongly since 21 June 2018 when it was 13.5% lower than it is today.

The voice over internet protocol (VoIP) company made two announcements today. The first is that it announced its timetable for the result and dividend dates. The annual result will be revealed on 28 August 2018.

The more important announcement is that the company said that it has completed its SuperInternet Group acquisition after receiving regulatory approval.

As a reminder, SuperInternet Group is a fully licensed independent Facilities Based Operator (FBO) in Singapore, which MNF acquired for $2 million.

Now, SuperInternet Group isn’t big – it’s only generating around S$1.6 million in revenue and is earnings before interest, tax, depreciation and amortisation (EBITDA) break-even.

The reason why MNF is interested is that it will offer a rapid entry into the Singapore market and it’s part of MNF’s regional expansion strategy in Asia.

Singapore has a high numb er of multinational businesses with regional HQs located in the city. MNF could win over the Singapore branches of its current Australian customers.

Investors appear to have turned off MNF over the last few months after the company announced it was investing $3.5 million into launching over-50 telco brand Pennytel. Management believe that it will be EBITDA positive by FY19 and contribute nearly $7.9 million of EBITDA in FY20.

Foolish takeaway

MNF is currently trading at 25x FY18’s organic earnings and 30x earnings including the Pennytel investment. It also comes with a grossed-up dividend yield of 2.4%.

I think MNF is trading an attractive value considering how much its earnings might grow between now and the end of FY20.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. 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 Scott Phillips.

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