Little known micro-cap 5G Networks Ltd (ASX: 5GN) this week announced its intention to acquire a Melbourne data centre for $5.7 million on a multiple of 7x EBITDA with the deal to be funded via cash and debt. It should also bring an additional $3 million in annualised revenue as the deal continues 5G’s acquisitive growth strategy.
5G Networks reports that it’s an enterprise internet services and data centre company, with more than 2,000 business customers including several top 50 ASX-listed businesses.
For the quarter ending December 31 2018 it posted an operating cash profit of $520,000 on revenue of $14.25 million, with cash on hand of $2.8 million.
It also expects revenue and EBITDA growth to accelerate over the second half of the fiscal year from already high rates.
Management also flagged that its ‘strong’ operating cash flow and a $1.3 million franking credit will allow it to pay a full year dividend, with a claim that this will be ongoing.
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Motley Fool contributor Tom Richardson owns shares of MNF Group Limited. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended BIGTINCAN FPO. 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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