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SLC - Superloop Limited

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System

System

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Superloop has been established to invest in telecommunications infrastructure, with the aim of becoming a leading independent provider of connectivity services in the Asia Pacific region. Specifically, Superloop's initial focus will be to invest in fibre optic telecommunications infrastructure between locations of high interconnection density (e.g. data centres and submarine cable landing stations) within Australia and Singapore.

It is anticipated that SLC will list on the ASX during June 2015.

http://www.superloop.com
 
System said:
Superloop has been established to invest in telecommunications infrastructure, with the aim of becoming a leading independent provider of connectivity services in the Asia Pacific region. Specifically, Superloop's initial focus will be to invest in fibre optic telecommunications infrastructure between locations of high interconnection density (e.g. data centres and submarine cable landing stations) within Australia and Singapore.

It is anticipated that SLC will list on the ASX during June 2015.

http://www.superloop.com
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A listed competitor for VOC (and TPG to an extent)...
I have had a read through the prospectus and this is very early stage, with no financial forecasts provided.
It will be interesting to see what their plan is for the Australian network. Is it their just to gain credibility with the investment community? I get the impression that the Singapore duct network is where the founder is excited about. On to the watchlist it goes!
 
Looks interesting, Malone and Slattery involved. It does say they dont have any plans for Oz at the moment, mostly overseas focussed (investigating hong kong).
what is the advantage of the superloop over current fibre installations?
Are they just going to compete on price or is there a genuine advantage to their design?
What kind of scale do they need to be profitable? VOC was not profitable at similar cable kms installed from memory, I suppose the higher density locations will help in that regard.

I will watch, but I have very little idea of what the asian fibre markets are like.
 
SLC has just successfully completed a fully underwritten ~$30.87 million equity raising via a placement to institutional investors and a non-renounceable retail entitlement offer.

Superloop owns and operates over 640 km of carrier-grade metropolitan fibre networks in Australia, Singapore and Hong Kong, connecting more than 275 of the region's key data centres and commercial buildings.

It effectively halved in price in the five months between August 2018 and January 2019 but there are now signs that it may have bottomed out at $1.30. It first hit $1.30 in late January and quickly bounced back off it, before touching it again in mid-March and again bouncing back off it. It looks to me like a classic double bottom formation.

SLC now looks to be forming a low-key uptrend as it battles its way back to $1.50.

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Superloop is an independent provider of connectivity services designing, constructing and operating networks throughout the Asia Pacific metro region. SLC invests in fibre optic telecommunications infrastructure between locations of high interconnection density within markets experiencing significant growth in interconnectivity. The company owns and operates over 670kms of carrier-grade metropolitan fibre networks in Australia, Singapore and Hong Kong, connecting more than 310 of the region's key data centres and bandwidth-intensive buildings.

From the 2019 Annual Meeting
Company Highlights Founded in 2014 to connect Asia Pacific to the cloud, with a legacy-free network capable of fulfilling the growth in demand for bandwidth Invested $256m in advanced fibre networks connecting bandwidth-intensive properties across Asia Pacific, on average 2 years into 20+ year useful life
Superloop also distributes connectivity within campuses smartly and securely, leveraging $210m of investments in adjacent platforms through acquisitions Core fibre connectivity
(1) revenues up 89% year-on-year (YoY), with sales ramp up now core Asia Pacific loop is live and connected FY19 EBITDA of $8.5m; FY20 $14m-$16m guidance, with stronger H2 performance, excluding other one-off transactions that may occur
With core network now in place, the marginal incremental investment required to win new customers represents the majority of the future capital needs of Superloop
(2) Capital structure reset with $92m equity raise & renegotiation of 4 year banking facility with senior lenders, with covenants reflecting infrastructure business model

One of my picks for 2020

Iggy
 
finding it hard to work out why SLC is struggling (as it has for quite a while). In May '19, a QIC offer at $1.95 didn't proceed and/ as it as thought Bevin Slattery was looking for a rival offer in the 2's. It came to naught, the SP never got near the offer price. In fact since listing 5 years ago, it ran to $3 in late 2016 but has been drifting S ever since. In September, a Capital Raise at 82c, some 35% of SLCs capitalisation, was fully underwritten. A two-tranche placement to institutional investors to raise approximately $55million ; and 1 for 6 accelerated non-renounceable entitlement offer to raise approximately $35 million .

- essentially a recapitalisation; as stated, the CR was going to paying back senior debt.
- SLC states the core infrastructure is now in place, and incremental further investment will be coming from customer growth.

This seems to have stabilised the share price in the last 3 months but has not held $1 with any conviction. I think what has spooked investors has been the pretty constant calls on capital, and just not getting the revenue.

A couple of points (+ve and -ve)
- I noticed Bevin Slattery committed to SLC, even at the expense of not participating in MegaPort MP1 corporate events (to his detriment, with MP1 firing and having risen from $2 to $10+ in the last 30 months, even while going to the market along the way)
- the INDIGO cable on budget and running; partners AARNet, Google, Indosat Ooredoo, Singtel, SubPartners (SLC) and Telstra announced in May that the INDIGO subsea cable system was ready to be deployed by consortium members, following the on-schedule completion of the INDIGO West (4,600km Singapore to Perth) and INDIGO Central (4,600km Perth to Sydney cables. Featuring new spectrum-sharing technology, each consortium member can independently leverage the new cable system to upgrade their networks and enable capacity increases on demand.
- by its very nature, choke points exist between countries where terrestrial infrastructure can't be added; submarine cabling is expensive but can deliver large amounts of data when laid.
- not sure with their Hong Kong network; is it impacted by recent political troubles? Probably.
- and the whole NBN issue must bring pricing pressure to each and all participants and competitors.
- and just as an aside, now this infrastructure is in place to "further leverage Superloop's technology platforms for bandwidth-intensive in-building and on-campus demands in Australia, Singapore and Hong Kong", would I invest in student housing for Asian students?
- Australia’s Academic and Research Network (AARNet) is owned by the Uni's and CSIRO, and this network connects over two million users—researchers, faculty, staff and students—at institutions across Australia to the commercial Internet, to their peers nationally and globally,..
 
Dona Ferentes said:
- SLC states the core infrastructure is now in place, and incremental further investment will be coming from customer growth.

This seems to have stabilised the share price in the last 3 months but has not held $1 with any conviction. I think what has spooked investors has been the pretty constant calls on capital, and just not getting the revenue...
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"deferred future revenues from coronavirus, given HK and Singapore ativities." - so, a bit of a falling knife, really.
 
Good analysis mate, I haven't ever dived into it far, but it looks like a business that has spent a huge amount of capital building something, and hoping that in the long term the ROIC ends up being higher than the CoC, not sure how that bet will play out.
 
In view of the falling share price I wonder if SLC is an attractive takeover proposition.

In May19 QIC group made an offer at 1.90/share (then 1.46). The current price is 0.75.
 
peter2 said:
In view of the falling share price I wonder if SLC is an attractive takeover proposition...
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good point; it's infrastructure. Built and in place.

(pity about that darn NBN hollowing out the sector's profitability; anywhere else in a world, where data and the networks tying things together has a growth trajectory to die for, it would be a more rational <less irrational> proposition)
 
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peter2 said:
Price bounced quickly off the lows. One to watch.
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Coming straight after results announced, I usually interpret such a move as a large holder (usually insto or fund manager) making a decision to quit (or go below 5%) and instructions go out. But it's often hard to buy in that selling pressure is great (until it isn't, whence the rebound). Because the falling knife may have a way to go.

with small caps, it's either conviction or move on.
 
Some reassuring words from Slattery has seen SLC lift 20% .... no longer bargain basement stuff.

Reaffirmed guidance, because there's more traffic on the IP Backbone and International Networks, offsetting the drop in Guest WiFi and Student Accommodation (old BigAir).

Taking out costs in a deliberate and proactive way has met with a tick from financiers. SLC still think positive operating cash flow is attainable; no timeline given, though. Next update, mid May.

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SLC is my pick for the month of May as it is continuing to trend up even when the market dips it is solid and waiting for a breakout to the same trend direction.
Thanks @Joe Blow
 

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Bazzi said:
SLC is my pick for the month of May as it is continuing to trend up even when the market dips it is solid and waiting for a breakout to the same trend direction.
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SLC doing all the right things, especially over the last few days
Renaissance Smaller Companies P/L has been doing a bit of buying then selling.
Since 21/2 acquired 2.27mill shares, average price 81c
And by 8/5 has sold 3.78mill shares, average price 82c.
- no longer a substantial holder as it's below the 5% mark.
(then, often, the selling stops; and whoo, SLC has put on 15% to close near $1.00 today)


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one beneficiary of changing work patterns
Over the last few months, the increased demand on our Internet / IP network has been significant, largely driven by the changing traffic profile and volume due to work from home patterns and an increase in video conferencing / streaming services. Superloop has experienced over 30% growth in traffic across our global network within a matter of weeks.
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This increase in customer demand has almost entirely been delivered on our existing domestic and international assets. The Company still enjoys significant spare capacity on most international routes, meaning there is further opportunity to continue to grow this business segment, without significant increase to operating or capital costs.
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... "the Company has already been placed into an operating cashflow positive position and continues to operate well within the debt facility headroom. In our most recent update (18 February 2020), EBITDA guidance provided was a range of $12m — $15m, reflecting anticipated downside risk relating to COVID-19. Despite challenging market conditions, the Company continues to track towards the midpoint of guidance."
 
The incumbent CEO will be dialing it back and going to the Board. New guy appointed has come out of NBN and TLS. Hope he's nimble:
With the unstoppable rise of the cloud, software defined wide area networking (SDWAN) and of course the NBN, the business market is experiencing a once in a generation disruption that Superloop is uniquely positioned to take advantage of. For the first time, the internet has enabled all businesses from the smallest to the largest to access the productivity improvements that enterprise grade applications enable ... Superloop is set to be a strong catalyst of this change.
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The SLC weekly chart looks interesting once again.
I've lots of info in the chart so lets take it one pane at a time.
Top pane: Shows the relative strength of SLC against a benchmark index. It's been green for a few months indicating that the price of SLC has been going up faster than the index. Nice.
Middle price pane: Price is now back at the resistance level (~1.21) after rallying with the market off the COVID low. The sideways (shallow) trading range interests me, BUT, the sloping resistance line reminds me that SLC has been in a longer term down trend for years. If price can break both lines and stay above them, that would be very positive for higher prices. Price has been trading just below the R line and the supply must run out soon (= higher price BO).
Lower volume pane: Ignore all the squiggly lines. I like that last week's volume was above average.

slc1608.PNG


Let's not forget that old take over offer at 1.90. I don't know why they wouldn't have bought SLC on market at 1/3 the price one year later. Perhaps that company is not going as well as it was.
 
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