If I had to point to one ASX stock that I think will enter the S&P/ASX 200 Index (ASX: XJO) in 2025, it'd be Tuas Ltd (ASX: TUA).
This business is already in the S&P/ASX 300 Index (ASX: XKO), and I believe it's doing everything it needs to enter the next index.
For starters, it's already a large business. According to the ASX, it has a market capitalisation of approximately $2.5 billion, making it bigger than ASX 200 stocks like Bellevue Gold Ltd (ASX: BGL), Centuria Capital Group (ASX: CNI) and Arena REIT No 1 (ASX: ARF).
2025 could be another important year for the Singaporean telecommunications business. It's growing quickly and aiming for more financial success.
Ongoing growth
The 2024 financial year was very successful for Tuas. It reported strong growth across various metrics, and I think the expansion of the business can continue in 2025.
For FY24, the business reported a 36% revenue increase year over year to $117.1 million, while operating profit (EBITDA) soared 60% to $49.7 million. The EBITDA margin improved by six percentage points to 42%.
For me, one of the most impressive parts of Tuas' growth is the number of subscribers it has attracted in Singapore. It's winning over Singaporeans with its low-cost subscription plans – in FY24, active mobile subscribers grew by 28% to 1.05 million. I think it can continue growing its mobile subscribers, helping it become an ASX 200 stock.
It's also looking at growing in the home broadband space. It already has 1 million interested mobile customers who may like Tuas' broadband offering. At the end of FY24, it had 4,000 broadband subscribers, and there was "strong consumer interest" in the service. I expect the company will be able to add a material number of broadband services in the coming years.
Profit for ASX 200 stock
One of the main reasons why I think Tuas will join the ASX 200 is because it's now reaching the milestone of positive net profit.
In FY24, it made a net loss of $4.4 million, an improvement of $10.9 million from FY23.
The business is targeting full-year positive net profit in FY25. Profit growth is normally what investors like to see, so further progress here could excite the market and justify its current and future valuation.
International expansion?
Singapore is a great country to operate in, but its population isn't that big. However, I think the business can expand into other Southeast Asian countries.
The investment team at Wilson Asset Management recently commented on where they think the company could expand:
Tuas is a significant disrupter to the telecommunications market, and we view that recent launch of broadband and enterprise services as increasing Tuas' total addressable market, and in time see its potential entry into Malaysia or Indonesia.
If the company expands into Indonesia, it could have a huge addressable market and eventually become a larger ASX 200 stock.
