The ASX growth share Tuas Ltd (ASX: TUA) was the latest investment I made in my portfolio, as it's one of the stocks I'm most optimistic about.
After a decline of around 20% in the last six months, I think the business is a very compelling investment at this lower price, as it continues to make impressive progress.
There are a few things that I'd ideally like to see with an ASX growth share, which I believe could help it deliver long-term success. I'd like to see the ability to deliver repeat revenue from customers, strong revenue growth, international expansion, and rising profit margins. Let's take a look at each of these elements.
Repeat revenue
It's attractive to me if the company has a lot of last year's revenue locked in each year.
Tuas is a Singaporean telecommunications business, which I'd describe as a fairly defensive sector where subscribers usually stick with their telco. The company has already won a significant number of customers in the Asian country and continues to expand its customer base.
Not only does this mean the company has a solid base of revenue (and operating profit), but it's also growing at a great pace.
Strong revenue growth
The business continues to grow rapidly, following several years of successful expansion in the country. I believe revenue growth is a fundamentally key factor for an ASX growth share's longer-term success. It needs to become larger to justify the market's expectations.
In the FY25 first-half result, the business reported that its total subscribers increased by 23.7% to 1.16 million as Singaporeans enjoy the value offering that Tuas provides.
The 23.7% subscriber growth helped revenue grow by 33.8% to $54.7 million.
I'm not sure how long Tuas will be able to grow its mobile subscriber numbers in Singapore at this pace, but the company has opened another growth avenue – broadband. While it had 1.16 million mobile subscribers at the end of the FY25 half-year result, it only had 14,347 broadband services. There is plenty of room to grow on this side of the business.
International expansion
I believe the business has significant growth potential because of the capability of the business to expand beyond Singapore. I'd describe Singapore as one of the most appealing Asian countries to do business in, but it only has a population of several million people.
However, I'm hopeful that the business can meaningfully expand into nearby Asian countries such as Malaysia and Indonesia. Singapore has a population that's a fraction of the size of those two countries.
Significantly expanding its total addressable market (TAM) can help it deliver better returns over the next five to ten years, in my view.
Rising profit margins
Tuas is growing quickly, and I'm expecting its net profit to grow even faster thanks to rising profit margins.
Considering investors usually value a business based on the amount of profit it makes and could produce in the future, I think Tuas is demonstrating the right financial progress for success.
The ASX growth share's operating profit (EBITDA) margin has been steadily climbing.
In the first half of FY22, the EBITDA margin was 24.6%, which grew to 36.1% in HY23, then 41% in HY24, and finally 45.2% in HY25. I think the company's EBITDA margin can continue climbing towards 50% in the coming results.
The company also achieved a positive net profit for the first time in the FY25 first-half results, reporting a bottom line of $3 million, a year-over-year increase of $6.5 million.
I'm expecting the bottom line to grow significantly in the coming years, which I believe will drive the Tuas share price higher.
