FY23e is the year of action for Comms Group. They need to focus...

FY23e is the year of action for Comms Group. They need to focus on completely integrating OnPlatinum following the end of the earn-out period (they couldn't extract synergies before this), ramp up the Wholesale contracts with KDDI and Vodafone and drive organic growth and efficiencies in the domestic telco and IT services biz. I don't expect any acquisitions - they will utilise free cash flow to pay down debt and wait for some of their competitors like Vonex to go bust, and then scoop their assets up on the cheap. Overall a solid result, but now FY23e is the year of "show me". It looks cheap regardless at 7c (~6-7x EBITDA) and interest payments are well covered so downside is protected. We are basically long the optionality that momentum accelerates in the Global Wholesale biz - if that's the case, $5m of incremental EBITDA from that over the next couple of years is not a distant possibility, and could easily see a >20c stock price (if they are not bought by a peer or financial buyer beforehand)

Btw - I just posted this on the post re Vonex's ($VN8) result:

This is busted. Annualising $3m of operating cash flow on $19.2m of debt is not a pretty picture. The reason for the auditor's report is that interest rates are going to eat up half of operating cash flow, before even thinking about opex and capex. Hence why the SP is tanking - will require a highly dilutive rights issue soon, and given the terrible execution on M&A integration alongside the legacy product suite (hence the anemic organic revenue growth), I don't think there is anyone out there to under-write this. I expect this to go bankrupt over the next year or two, with smarter players like Comms Group (CCG AX) which has a much cleaner balance sheet, better and aligned management and far greater organic growth opportunities to scoop up these assets on the cheap, and poach their customers in the meantime. Long $CCG, short $VN8

Good luck all.