ASX growth shares can be some of the best performers over the long term because of the power of compounding. If I were looking to buy an exciting stock with loads of potential, Tuas Ltd (ASX: TUA) would be one of the first ones I'd add to my portfolio.
It's not one of the most well-known businesses out there. It has only been on the ASX for a few years following its demerger from TPG Telecom Ltd (ASX: TPG).
Tuas is a Singaporean telecommunications business that provides customers with good-value mobile plans. It has already grown to more than 1 million mobile customers in Singapore, and I believe the business has the potential to boost its profitability substantially in the coming years.
Several factors make me believe the business could become a future ASX blue-chip share.
Strong core growth
For Tuas, the critical segment of its business is the Singapore mobile segment.
It has consistently (and rapidly) grown its number of active mobile services, from 487,000 in the first half of FY22 to 938,000 in the first half of FY24, and the ASX growth share reached 1.16 million in the first half of FY25.
In the HY25 result, mobile customers increased by 23.7%. That is an impressive growth rate and suggests the business can continue growing at a pleasing pace for the foreseeable future.
Growing its subscriber base greatly helps its revenue and profit margins, but I'll get to that below.
Revenue diversification
When I think about some of the best businesses on the ASX or the global stock market, many generate earnings in various ways, providing multiple avenues for growth.
Tuas has recently begun focusing on growing a broadband division. At the end of the second half of FY24, it had 3,287 active broadband services, which rose to 14,347 as of the first half of FY25.
The company already has 1.1 million mobile subscribers to whom it can advertise and potentially offer a compelling deal. I'm not expecting Tuas to reach 1 million broadband customers, but I think there is plenty of upside for the business to reach notable scale with this division and boost overall profitability.
Tuas says it's bringing "unmatched high-speed connectivity at the lowest price points".
Rising profit margins
Tuas seems like a business that can grow its profit margins in the coming years. Operating leverage is a powerful financial force that helps the company deliver net profit growth faster than revenue growth.
As the ASX growth shares' subscriber base and revenue rise, the operating profit (EBITDA) margin is climbing. I believe this trend will likely continue for the foreseeable future.
In the first half of FY22, the EBITDA margin was 24.6%, which climbed to 36.1% in HY23, 41% in HY24, and 45.2% in HY25.
I don't know what the EBITDA margin will be in FY30, but I think it will be materially higher than it is today. This could help the business generate significantly more profit in the coming years.
International expansion?
Tuas is already delivering strong growth in Singapore, but I'm hopeful it can expand its impressive mobile business into neighbouring countries such as Malaysia and Indonesia.
I'm not expecting the ASX growth share to achieve the same market share in other Asia countries as Singapore, but many Southeast Asian countries have much larger populations than Singapore.
This suggests that the business has a long growth runway if it can tap into that international potential.
