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I wouldn't worry too much as you haven't bought any yet.

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14/12/18

11:55

Post #: 36859353
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Originally posted by Delphi ↑

I have been looking for an entry point for some time now as the SP keeps getting cheaper but I keep getting put off by the price action. Especially now given the disappointing response to the AFR article on possibly being acquired. So what is holding the SP back? a couple of thoughts which i would welcome comment on are:

1.my concern and potentially any would be acquirer is how sustainable are their earnings? NBN contributed 70% of their 2018 revenues (excluding broadband division) yet the NBN will be completed supposedly by 2021, which means no more sales? Yes, their 2 other major contracts should have ramped up by then but how long term are those contracts? If they are similar to NBN then they will have a comparatively short life. Which means no one will want to pay up a big multiple. Yes, 5G and other potential major contracts are possible but are they are probable?

2. Also the other concern is they make a relatively small EBITDA margin of 8-11% which is very poor compared to most IT companies, which suggests the market doesn't value their technology and/or there is too much competition.

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I wouldn't worry too much as you haven't bought any yet.

NTC Price at posting: 71.5¢ Sentiment: Buy Disclosure: Held
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