For the year in review, Spirit opened 2020 at 0.21, and closed at 0.40, which is a record yearly close.
Last Thursday's close is down from its yearly high of 0.45, which was reached in July and December. At the other extreme, the yearly low was 0.12, which occurred a few times from March-May. Following that, the May-July period saw a rally into the low 40s:
Still a lesser known stock, ST1's overall awareness would appear to have grown during the year. The 20-day moving average for daily volume (not price) shows growth from 189,000 shares per day to around 955,000. That's a five-fold growth in 12 months.
Regarding fundamental analysis, the bottom line is that Spirit is is running at a loss. As noted in its FY20 presentation, its Net Profit After Tax for FY2020 was -$1.5 million. That's worse than its FY19 result, which was -$0.9 million.
But of course there are other metrics that paint a more promising picture (when comparing FY19 vs FY20):
- Total revenue catapulted from $17.5 million to $34.9 million
- Gross profit jumped from $12.9 million to $22.2 million
- EBITDA increased from $1.5 million to $2.2 million.
From operational viewpoint, 2020 was a year of continued acquisitions (see chart further below). For the last year or two, it seems that every quarterly update refers to more acquisitions in the pipeline, and it's reassuring to see ST1 deliver on that part of their business strategy - repeatedly.
Looking more broadly at the Australian telco sector, there seems to be a phase of industry consolidation - a kind of arms race for inorganic growth and M&A. It almost feels like ST1 and other players (like Uniti) are in a gold rush. While originally focussing on home internet service provision, it appears both companies have realised that greater growth and margins can be found elsewhere i.e. business provision. In simple terms, ST1 has pushed further into broader IT services, while UWL has increased its presence into greenfield infrastructure.
I also keep thinking about the NSW State Government's $100 million Gig Sate tender, in which UWL and Opticomm (now owned by UWL) announced a Memorandum of Understanding.
An increased debt facility is probably a sign of confidence from a banking perspective as well.
But let's get back to some more yearly charts. Here are some announcements during the year and their effect on the price:
(1) Jan 28: Spirit acquires Cloud Business Technology
(2) Feb 14: Spirit acquires Trident & Neptune Group
(3) Apr 15: Spirit raises $9.2M in Placement & Expands CBA Debt Facility
(4) Jun 25: Acquisition of VPD Group
(5) Aug 18: Financial Year 2020 results
(6) Dec 2: Acquisition of Intalock & Market Update
Finally, let's end with this comparison of 4 key players in the telco/wireless/IT services industry. Which company had the best 12-month return?
I believe it was ST1.
