Switzer - TPG Telecom a contrarian Buy

http://www.switzer.com.au/the-experts/paul-rickard/tpg---executing-on-strategy-but-out-of-favour/

TPG - executing on strategy, but out of favour

Summary excerpt from the article:

The risk with margin crunch is real and it is unlikely that the market is going to stop worrying about this in the short term. It is not really “new news” and I am not sure why the market wasn’t concerned when the share price got close to $13.00, but “group think” prevails and the telco sector is on the nose. Time will tell how this plays out.

That said, TPG is executing well and the almost halving of the share price is an incredible re-assessment of value for a company that is meeting its targets.

TPG is reasonably priced, trading on a forecast multiple of 14.0 times FY17 earnings and 14.3 times FY18 earnings (the brokers are forecasting earnings to fall marginally in FY18). But I am a believer in management track record and TPG boasts a strong record. Although growth has been partly driven by acquisition, the following charts are quite impressive.

And while the opportunities for mobile networks in Singapore and/or Australia are likely to require capital and may take some years to show fruition, David Teoh and his team at TPG are very competent operators.

A contrarian buy.