MP1 - Megaport Limited

[Dona Ferentes]

Firetrail’s Eleanor Swanson believes Megaport is currently one of the best stories on the sharemarket, and has the potential to join the ranks of Australian-founded technology companies such as Atlassian and Afterpay.

Unveiling the Bevan Slattery-backed company as her top pick at the 2021 Sohn Hearts & Minds Conference, Swanson says Megaport is solving the connection issues that have plagued businesses around the world, and by doing so, has brought the telco industry into the 21st century.

“Between the years 2000 and 2013, global internet traffic jumped 600-fold. The staggering increase in data traffic caused the customer experience on telco networks to plummet from average to abysmal,” Swanson says.

“The Megaport network is fast, flexible, and a fraction of the cost of traditional telco networks. The Megaport network is the best network, as connections go live in minutes, not months, it’s a pay-as-you-go model, and you can scale up or down as you need.”

The loyalty of Megaport’s customer base adds to the company’s appeal, with Firetrail expecting customer spend to grow at 30 per cent a year.

Megaport’s ability to innovate has enabled it to double the size of its addressable market from $7 billion to $14 billion over the past 12 months. The company operates in more than 700 locations, while its closest competitor is limited to 200.

Megaport has also created what Swanson describes as a “sales force army”, having expanded its sales reps from just 40 at the start of this year to 40,000.

“[Megaport] is now on the precipice of greatness, and has the potential to grow into one of the largest telecommunication companies globally,” Swanson says.

While the stock is currently around $20, Swanson says it can double to more than $40 a share at a market capitalisation of more than $6 billion by the end of 2022.

 

[Dona Ferentes]

Megaport reports strong growth across all operating metrics over previous quarter, with 123 new customers added and an increase of 8% in total revenue growth in the quarter. During the quarter, the Company launched the PartnerVantage portal supporting indirect partners to resell Megaport services, and as at 31 December 2021, 22 additional indirect channel partnership arrangements have been signed.

Long-term deal commitments formed a majority of net new additions in the quarter with 64% of net new Ports being acquired with committed terms of between 12 and 36 months. This represents a growing trend of customers using Megaport to connect long-term IT solutions and taking advantage of the ability to rapidly connect those services.

● At the end of December 2021, the Company's cash position was $105M

 

[Dona Ferentes]

Megaport reports strong growth across all operating metrics over previous half, with 170 new customers added and an increase of 42% in revenue over the comparable period in FY21. During the half, the Company launched the PartnerVantage portal supporting indirect partners to resell Megaport services.

Performance; 1HFY22 Financial Highlights

• Company revenue for the half year period ended 31 December 2021 was $51.2M, an increase of $15.2M or 42% from the same period ended 31 December 2020.
• Monthly Recurring Revenue (MRR) for the month of December 2021 was $9.2M, an increase of $2.9M or 46% from the month of December 2020.
• The business generated a profit after direct costs of $30.9M for the half year period 1 ended 31 December 2021, an increase of $12.7M or 69% from the same period ended 31 December 2020 ($18.2M).
• Net loss for the half year period ended 31 December 2021 was $20.2M.
• At 31 December 2021, the Company cash position was $104.6M.

are we there yet? Shares have dropped 50% since November; trading just above $13.

 

[Dona Ferentes]

and I wonder if this will remove the negativity?

MP1 announced today the sell down of 3,000,000 shares in the Company held by Megaport Chairman, Mr Bevan Slattery. The sale of 3,000,000 shares (equivalent to 1.90% of the Company’s issued capital), which was underwritten by UBS Securities Australia Limited, was undertaken at a price of $13.05 per share and the shares distributed to institutional investors. Following the sell down, Mr Slattery will continue to hold 8,070,940 shares in Megaport (equivalent to 5.11% of the Company’s issued capital).

Mr Slattery said, “I am excited for Megaport's continued growth and am committed to supporting the Company. I have no intention of selling shares within the next 6 months and am committed to ensuring the Company's success as it continues to scale up and scale out.”

Mr Slattery intends to use the proceeds from the sale to facilitate ongoing investment opportunities.

- probably in the next ventures, FiberSense and/or SuperSoniQ ... post #24
https://www.aussiestockforums.com/threads/slc-superloop-limited.29844/page-2#post-1091498

 

[finicky]

Currently down 16.5% @ $10.65 for this continously unprofitable tech company
I've noticed a couple of pro commentators trying to get retailers into MP1 recently and Commsec analysts have 8 strong buys and 4 holds against it. Goldman Sucks has a target of 19.90.
The Qtrly report is obscure to me but I get the impression that revenue isn't growing all that fast.
I saw that Netflix bombed overnight, gapping down to US$212 and closing a bit higher. Close was down 35%.

Chart could easily go lower medium term to my eye?
MP1 All Data Daily

 

[Dona Ferentes]

The Qtrly report is obscure to me but I get the impression that revenue isn't growing all that fast.

Three percent is growing!! But at what cost, it always seems to be on the never never?

“The Megaport team is energized and focused on delivering a solid fourth quarter performance and setting our business up for great momentum heading into Fiscal year 2023.”

 

[dyna]

I've noticed a couple of pro commentators

Macquarie's fundies ,too, are real keen on it.
It's all too hard for me, but I'll keep watching.

 

[finicky]

@dyna the pro commentators were suggesting it before today's walloping so we don't need to bother about them. As were the 8 'strong buy' analysts that Commsec taps (also 4 holds) and Goldman's Buy rec with a 19.90 target.

Not held

 

[Dona Ferentes]

@dyna the pro commentators were suggesting it before today's walloping so we don't need to bother about them. As were the 8 'strong buy' analysts that Commsec taps (also 4 holds) and Goldman's Buy rec with a 19.90 target

and what about the bold (foolish?) opinion piece that was 'out there' late last year (Post #41 - 03 Dec)

Megaport is now on the precipice of greatness, and has the potential to grow into one of the largest telecommunication companies globally,” Swanson says.
.....While the stock is currently around $20, Swanson says it can double to more than $40 a share .... by the end of 2022.

- $40. Haha. better get a wriggle on, then !

I generally take the spin-meisters' opining that when they talk of a price, that is where they'll be out of the holding, completely, by the time a share reaches that level.

(I do hold, as a free carry, MP1)

 

[finicky]

James Gerrish's postcard summary today.
Megaport (ASX:MP1) $10.01

MP1 -21.55%: a very disappointing third-quarter update from the network connections business today which is struggling for growth. Monthly Recurring Revenue (MRR) was up just 3% on the previous quarter to $9.5m. This was hampered though by FX headwinds, but the annualised rate of $114m still leaves them on a very expensive ~15x sales multiple. Shares closed on the day’s low, sending them back to a 2 year low.

---------------- '' ---------------

Megaport was the 'Livewire' #1 stock pick for 2022 by two fundies: Firetrail's Eleanor Swanson, already quoted by Dona Ferentes, and Michael Steele, Yarra Capital Management.

A week ago, On April 14 they gave their updates, Swanson said,

"The main driver of Megaport's underperformance, in our view, has been interest rate rises and the impact a higher weighted average cost of capital has on the valuation of long duration growth companies." She said.

"Despite the headwind rising interest rates pose to the technology sector, we continue to see material upside in Megaport."

In fact, Megaport generated 75% gross profit margins and 50% EBITDA margins in its recent 1H22 result, she said.
"The ANZ business is more mature than Megaport’s businesses in Europe and North America. The underlying profitability of Megaport has increased our conviction in the stock’s potential to outperform over the medium term as the business continues to scale," she said.

"Megaport is a high-quality technology company with recurring revenue, low customer churn and a significant lead over competitors. We continue to see upside in Megaport over the next 12mths and maintain a high level of conviction in our Megaport BUY thesis.""

Steele maintained it is "a highly attractive investment opportunity". He said,

"The stock’s recent underperformance is consistent with the general market rotation away from growth companies – given the increase in long-dated interest rate expectations – and higher-than-expected costs as reported at the half-year result in February," he said.

"This increase in costs at the result does not change our positive long-term view given it reflected investment in new products and additional distribution capability. The phasing of this full-year cost investment was weighted to the first half result, meaning lower cost growth is expected going forward."

With this in mind, Megaport's half-year result provided the Yarra team with confidence that the business is making progress in its efforts to scale, Steele said, with revenue up 42% year on year and gross profits up 69% over the same time period."

Here's how the #1 stock picks for 2022 are tracking

Well, folks, we've made it - and by that, I mean through the first quarter of 2022. It's been tough, tiresome, and damn it, sometimes terrifying, but at least the country's finest stockpickers (and their 18 stock picks) can help sail us through the stormy markets that conceivably lie ahead....

www.livewiremarkets.com

 

[Miner]

and I wonder if this will remove the negativity?

MP1 announced today the sell down of 3,000,000 shares in the Company held by Megaport Chairman, Mr Bevan Slattery. The sale of 3,000,000 shares (equivalent to 1.90% of the Company’s issued capital), which was underwritten by UBS Securities Australia Limited, was undertaken at a price of $13.05 per share and the shares distributed to institutional investors. Following the sell down, Mr Slattery will continue to hold 8,070,940 shares in Megaport (equivalent to 5.11% of the Company’s issued capital).


Mr Slattery intends to use the proceeds from the sale to facilitate ongoing investment opportunities.

- probably in the next ventures, FiberSense and/or SuperSoniQ ... post #24
https://www.aussiestockforums.com/threads/slc-superloop-limited.29844/page-2#post-1091498

Reading the old postings after seeing rather a miserable fall of MP1 today. Did Bevan Slattery know something that is reflected after one money?
Searching on the Web, the search found James Mickelboro wrote this one back on January 22. James writes on the FOOL website also
Motley published this one

Here's why the Megaport share price is tumbling 18% today

The Megaport Ltd (ASX: MP1) share price is deeply in the red after the company released its quarterly update before the open. Take a look.

www.fool.com.au

Why the Megaport (ASX:MP1) share price is crashing 12% today - Monex Securities

Megaport’s shares are falling on Wednesday… The post Why the Megaport (ASX:MP1) share price is crashing 12% today appeared first on The Motley Fool Australia. – Key points Softening growth during the second quarter weighing on its shares Megaport shares also caught up in tech selloff Management...

www.monexsecurities.com.au

" At the time of writing, the leading elastic interconnection services provider’s shares are down 12% to $16.10.

Why is the Megaport share price falling?​

Investors have been selling down the Megaport share price today amid broad weakness in the tech sector and the release of an underwhelming second quarter update. According to the release, Megaport reported a quarter on quarter increase of just $0.6 million or 7% in its monthly recurring revenue (MRR) to $9.2 million. This led to an 8% increase in second quarter revenue to $26.6 million.

Driving this was a 5% increase in customer numbers to 2,455, a 5% lift in total ports to 8,523, and a modest 2% rise in average revenue per port to $1.074. This was supported by the launch of the PartnerVantage portal, which allows indirect partners to resell Megaport services.

While no details were provided on Megaport’s earnings during the period, it did reveal that its cash balance stood at $105 million at 31 December. This is down from $114 million since the end of September.

Judging by the Megaport share price performance today, its growth during the quarter doesn’t appear to have been enough for the market. Particularly given the sky high multiples its shares trade on."

 

[Miner]

James Gerrish's postcard summary today.
Megaport (ASX:MP1) $10.01

MP1 -21.55%: a very disappointing third-quarter update from the network connections business today which is struggling for growth. Monthly Recurring Revenue (MRR) was up just 3% on the previous quarter to $9.5m. This was hampered though by FX headwinds, but the annualised rate of $114m still leaves them on a very expensive ~15x sales multiple. Shares closed on the day’s low, sending them back to a 2 year low.

---------------- '' ---------------

Megaport was the 'Livewire' #1 stock pick for 2022 by two fundies: Firetrail's Eleanor Swanson, already quoted by Dona Ferentes, and Michael Steele, Yarra Capital Management.

A week ago, On April 14 they gave their updates, Swanson said,

"The main driver of Megaport's underperformance, in our view, has been interest rate rises and the impact a higher weighted average cost of capital has on the valuation of long duration growth companies." She said.



In fact, Megaport generated 75% gross profit margins and 50% EBITDA margins in its recent 1H22 result, she said.
"The ANZ business is more mature than Megaport’s businesses in Europe and North America. The underlying profitability of Megaport has increased our conviction in the stock’s potential to outperform over the medium term as the business continues to scale," she said.



Steele maintained it is "a highly attractive investment opportunity". He said,

"The stock’s recent underperformance is consistent with the general market rotation away from growth companies – given the increase in long-dated interest rate expectations – and higher-than-expected costs as reported at the half-year result in February," he said.



With this in mind, Megaport's half-year result provided the Yarra team with confidence that the business is making progress in its efforts to scale, Steele said, with revenue up 42% year on year and gross profits up 69% over the same time period."

Here's how the #1 stock picks for 2022 are tracking

Well, folks, we've made it - and by that, I mean through the first quarter of 2022. It's been tough, tiresome, and damn it, sometimes terrifying, but at least the country's finest stockpickers (and their 18 stock picks) can help sail us through the stormy markets that conceivably lie ahead....

www.livewiremarkets.com

Very well research indeed. These experts are good for nothing still many of us including me, tend to listen to them.
I have not seen yesterday what the dial guages said but today after closing of market - technical sell is a strong one but analyst says strong buy. How long the piece of string? At what price is a buy for analyst - not today's price

 

[Miner]

Another blow on MP1. From closing price of Wednesday until Friday 11 AM AEST the price has gone south by about 40 %.
lots of blood on a software product for sure
Look at the fundies foolish recommendation even on 21 April and predicted prices. It is because they always get paid and play with others money. Look below recs from fundies and our FNA Mr Rudy - still hopeful to rise from the ashes.
:
This is today's recommendation from another mob on buying MP1 at $10.01 and reasoning :

 

[Dona Ferentes]

MP1 -21.55%: a very disappointing third-quarter update from the network connections business which is struggling for growth ..... the annualised rate of $114m still leaves them on a very expensive ~15x sales multiple.

Friday wasn't much chop either. But with the SP below $10, the sales multiple has dropped .. to around 10x. !

Megaport's half-year result provided the Yarra team with confidence that the business is making progress in its efforts to scale, with revenue up 42% year on year and gross profits up 69% over the same time period."

Ah yes, the analysts do like it (or else have a large chunk of post-growth stock they still need to drop; hence the boostering.)

In a note to clients, UBS analysts stated:
"We remain positive on the medium to long-term opportunity for MP1. That said, it is hard to disagree that some of the accelerators to growth are taking longer than anticipated to come through, which in our view pushes out the earnings potential (rather than reducing it). "

Likewise, a note from Citi indicates the equity team remains bullish on the Megaport share price in the longer term. Though, the disappointing quarterly update triggered a cut in their price target to $16.60

 

[finicky]

Strange day on Friday for a number of out of favour sector stocks. MP1 up 16%! and need a 3 year weekly chart to find a comparable positive weekly volume. The daily candle is bullish looking with the body inside the previous day and the weekly candle roughly conforms to a hammer. The low of the day came close to meeting a 'measured move' target (top of $20 down to period of consolidation equals period of consolidation down the low). Not a bad candidate for a reversal but for how long? I'm not betting on it anyway.

Techy edge:
NEA ^ 18%
XRO ^ 7%
PME ^ 8%
ARB ^ 7%
ALU ^ 7%
NAN ^ 12%
REA ^ 8%
UB1 ^ 9%
TNY ^ 9%

Retail discretionary:
MYR ^ 8%
ADH ^ 10%
CCX ^ 9%
KGN ^ 11%

MP1 daily

 

[Dona Ferentes]

Smoke and fire.

Megaport is shoring up its takeover defences, recognising that a bombed out share price could leave it vulnerable to an opportunistic bid.

Street Talk understands Megaport has taken pitches from a handful of investment banks in recent weeks, keen to get their intelligence on the company and its market, and buyer appetite in the sector..

.
There have been too many gyrations in SP for it to be otherwise.

 

[bk1]

Ideally @finicky , that big red candle on 21 April should be stopping volume but it wasn't and the bleeding has continued.
Needs to base for a while and show strength during tech sell offs, in my opinion.

 

[finicky]

@bk1 sometimes I wonder what I was taking when I see an old comment:

The daily candle is bullish looking with the body inside the previous

The daily candle was bullish, in part because the body was entirely outside the previous. Maybe that's what I was trying to say, or maybe I was transposing a notion about the weekly candle, who cares lol.

Anyway I'm not sure we can count on a base forming, as past history shows v shaped reversals. I'm not at all assertive that this will be one, just a candidate, and its not over till it's over - as the daily rally has not yet been fully undone.

Not sure I understand @Dona Ferentes posted table - I am guessing that the estimated future metrics are the new ones after the % revisions given.

All data weekly

 

[Dona Ferentes]

..not sure I understand @Dona Ferentes posted table - I am guessing that the estimated future metrics are the new ones after the % revisions given.

I think so, but, as it is from Citi, I'm sure they are using some arcane sleight of hand to make a story..

 

[Dona Ferentes]

MP1 seems to be in thrall of large holders, the insto's, trading in and out. They all seem to be having a go. The last 3 months have been very active, with big volumes going through;

• Mitsubishi UFJ Financial Group, (MUFJ)
• State Street
• UBS
• Citi

Now if the tax year has ended and they have rotated /juggled losses, etc; maybe things will settle down. And maybe a corporate action emerges.

Now $5.60, low for the year has been at $4.70