ASX:ABB
Aussie Broadband Ltd
Investment Summary
The fund managers believe that Aussie Broadband Ltd presents a valuable investment opportunity, especially following recent price movements and operational strategies. They highlight the company’s exceptionally strong balance sheet, which provides optional capital management strategies. Despite a recent dip in share price attributed to earnings guidance that missed expectations, the fund managers maintain optimism due to strong underlying business performance, including double-digit subscriber growth and increased exposure to higher-margin Enterprise & Government segments. Furthermore, the launch of the "Buddy" digital-first brand is seen as a strategic move to target cost-conscious consumers, although it carries $10m in upfront costs. The potential for revenue and cost synergies from the recent acquisition bid for Superloop adds to a compelling growth narrative. Overall, the fund managers view Aussie Broadband stock as cheap at ~7x FY25e EV/EBITDA, presenting a favorable risk-reward balance for investors.
Commentary From The Managers
Milford Asset Management
30 Sept 2024
$3.85
- Recent addition to the Fund
- Aussie Broadband has rallied 16.0%
- Optimism surrounding near-term catalysts over the next six months
- Exceptionally strong balance sheet provides optionality around capital management
Blackwattle Investment Partners
31 July 2024
$3.19
- Aussie Broadband fell 7.8% in July after providing FY24e earnings upgrade
- FY25e guidance missed market expectations
- Loss of the Origin white label contract led to operating deleverage that was not effectively communicated
- Aussie is launching a digital-first residential challenger brand called "Buddy" targeting value-conscious customers, with $10m in one-off costs
- Underlying business continues to perform well with double-digit % subscriber growth across a diversified customer base
- Increased exposure to stickier, higher-margin Enterprise & Government (E&G) improving earnings quality and predictability
- Currently screens as attractive at ~7x FY25e EV/EBITDA with growth levers and a strong balance sheet
Blackwattle Investment Partners
28 Feb 2024
$4.49
- Blackwattle Investment Partners updates on investment thesis regarding Aussie Broadband Ltd.
- Aussie Broadband rose 18.5% post 1H24 result release.
- Growth in broadband connections across all segments: Residential +13%, Business +20%, Enterprise and Government +25%, Wholesale +62%.
- EBITDA upgraded to the top end of guidance.
- Management re-organisation suggests M&A activity is on the horizon.
- Aussie Broadband acquired a 19.9% stake in Superloop and made an all-scrip indicative bid.
- Superloop has rejected the bid, returning negotiations to Aussie’s direction.
- Potential for significant revenue and cost synergies with a combination of the two businesses.
- Blackwattle Investment Partners continues to hold due to these developments.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.