UWL - Uniti Group

[Dona Ferentes]

This is a fund manager's view. (forgotten who)


: What is your most underrated stock at the moment?

HT: "I'd probably say Uniti Group Ltd (ASX: UWL), as it is now called. It is a fibre network provider. Over the last 18 months it transitioned from providing fibre network services to residential, greenfield residential developments to become much more a fibre infrastructure company. It has recently just bought OptiComm Ltd, and also bought the Telstra Corporation Ltd (ASX: TLS) Velocity business.

"I think COVID has highlighted the importance of digital technology and also fibre connectivity. What we found interesting and one of the observations we have made is that these assets are increasingly being appreciated as social infrastructure assets. The utility type assets, much like toll roads and airports, but I do not think they have been historically thought of in that way.

"COVID has helped really shift that focus and show that these businesses have strong annuity earnings and, in some ways, aren't as volatile or… impacted by things like economic activity such as passenger movements and car traffic and so forth.

"The one thing that struck us is that during the bid they made for OptiComm, Aware Super, which is the old First State Super, made a rival bid. In our mind, this reinforces the point that these assets are starting to be viewed in a different light, [as] the social infrastructure type assets.

"Our view is that Unity is now the number 2 player in what is essentially a duopoly market with NBN. And they are the only player that has got the ability to sell in the wholesale and retail channels, through having recently won structural separation approval from the ACCC. It is a business that… has probably emerged stronger from COVID to become really what we think will be a social or a fibre infrastructure business going forward. "

(hard to price that, though)
there has been some enthusiasm on recent news, of late. ....then consolidation. Will it hold above $1.80?
... 6 month, daily chart

DNH

 

[peter2]

I don't think a six month chart shows the growth history nor potential of UWL. UWL listed back in early 2019 so it's quite new. This chart shows all of it's listed price history. Immediately after listing UWL increased tenfold. Spectacular. After such a fast rally we'd expect some consolidation and a corrective move. The consolidation was shallow with few sellers until the Covid market selloff (Feb 2020). Since then UWL has transformed it's business by buying LBNCo, Opticom and the TLS Velocity (Bris) businesses. This activity along with the capital raisings have kept potential investors uncertain on the future prospects of UWL. Have they paid too much? Can they amalgamate the new businesses seamlessly to form a new company?

Last week's price breakout of the all time high indicates that the future prospects for UWL look promising. A chartist's price projection based on the pattern low indicates a future price target of 2.80 (1.80 + 1.80-0.80).

 

[Dona Ferentes]

Last week's price breakout of the all time high indicates that the future prospects for UWL look promising.

the growth is there

- Record Net Operating Cash Flow of $16.1M, up 53% on prior quarter (Q1-FY21)
- 544% increase in Net Operating Cash Flow vs prior corresponding period (Q2-FY20)
- Record Free Cash Flow in Q2 of $11.3M, up 64% on prior quarter (Q1-FY21)
- Free Cash Flow represents 70% of Net Operating Cashflow, after all capex
- Key financial performance metrics for first half of FY21 above forecast levels
- Materially above-forecast growth in net new FTTP activations in the quarter

 

[Dona Ferentes]

Ally Selby (LiveWire Markets): First up, we have Uniti Group. They’ve made numerous acquisitions over the past 12 months and its share price is up around 95 per cent over the same time period. Chris, it’s one of your top holdings. Take us through your reasoning behind it.

Chris Stott (1851 Capital): We’re quite attracted to the management team – Michael Simmons, Vaughan Bowen – who have been there and done that before – some of the best performing telco entrepreneurs in the last 10 years. Really strong balance sheet, ASX 200 inclusion coming, we think, over the next few weeks. So, it’s a buy for us over the medium-to-longer term.

Ally Selby (LiveWire Markets): Marcus, do you think it’s a buy, hold, or sell?

Marcus Burns (Spheria): Look, I’m going to take the other side of that and say it’s a sell. The key thing for us is we see some risks around the balance sheet. They have done a lot of acquisitions to Chris’ point, but it’s carrying a tonne of goodwill and we think there’s some long-term potential margin risk.

 

[Dona Ferentes]

Any insights as to why Uniti appears to be the best of the 'second tier' telco ICT sector would be appreciated.

 

[Beaches]

Any insights as to why Uniti appears to be the best of the 'second tier' telco ICT sector would be appreciated.

I think the market took that as a challenge. Up another 3.5% on a down day for the XJO.
.

 

[Dona Ferentes]

My feeling is that sector allocation in telco / ICT is moving around, now Vocus Group’s life on the ASX has only a few days to go after shareholders approved the $3.5 billion buyout. It is a possibility that money is following the entrepreneurs, and UWL pathway is similar to the previous decade's of acquisition and consolidation as small players aimed for mid-tier.

 

[bk1]

I feel its more of a consequence of changes in the communications industry, specifically, Telstra rationalising parts or silos of their business, NBN being dragged from a monopoly on fibre services.
I think there is room for agile, nimble providers of fibre, 5g and SaaS.
But whatever your view, the market obviously likes the story of acquisition and management.
Up 3.5% on a quiet day on the ASX...

I hold UWL, OTW...

 

[bk1]

FY21 results out, shareprice rising by 6% on the results.
W & I leading the way with excellent margins, the M & A activity if the past two years seems to have paid off.
Now generating a lot of cash flow...

 

[tech/a]

Held this in my Long term portfolio for ages.

 

[Dona Ferentes]

Uniti reported $64.2 million of free cash flow with its full year results, and will consider paying dividends in future periods.

Revenue nearly tripled to $160.5 million. Net profit almost doubled to $29.2 million.

CEO Mick Simmons described the second half as a "clean six months" as it had not made any acquisitions during the period, and told investors M&A activity was unlikely for the time being.

He said Uniti had weathered the toll from COVID19 outbreaks in Sydney and Melbourne but warned any slowdown in construction activity, critical for the company as it lays down fibre to new property developments, would probably not eventuate until later in the calendar year.

The company recorded a 15 per cent increase in active, connected or in construction premises to take its total to 500,000 in the second half of the 2021 financial year. When the migration of customers from its buyout of Telstra Velocity is finished, this will stretch to over 565,000.

 

[bk1]

Trading Halt just before close of the market this afternoon. Somebody got wind of it, 14 million volume, thats only happened a couple of times in the recent past.

 

[Dona Ferentes]

Trading Halt just before close of the market this afternoon.

Reasons for trading halt: To enable an orderly release of information regarding an announcement regarding a member of the executive team in response to media activity.

 

[Dona Ferentes]

Reasons for trading halt: To enable an orderly release of information regarding an announcement regarding a member of the executive team in response to media activity.

apples and trees? Mandy R-D ?...

UWL notes media reports earlier today regarding allegations having been made against one of its directors, Mr Vaughan Bowen, by ASIC in relation to the personal trading of shares in Vocus Group Limited in June 2019.

The Company understands that Mr Bowen emphatically denies the allegations and will be vigorously defending the matter. The Company also notes that this matter does not relate to trading in UWL shares.

The operations of Uniti Group will not be impacted. The Company’s business, and executive team, will continue as normal under the leadership of MD & CEO Michael Simmons. The UWL Board does not intend to make any changes to Mr Bowen’s role and position of Executive Director (M&A) of the Company, which will continue, until the outcome of this matter has been determined.

 

[Dona Ferentes]

UWL proposes to undertake an on-market share buyback subject to prevailing share price, market conditions and alternate uses of capital.

In the interests of ensuring that the market is fully informed prior to commencing the share buyback, the Company notes it has received approaches from more than one party indicating potential interest in an acquisition of the Company, which as of this time, do not include detail as to timing, price or conditions. Therefore, the Company notes that there is no guarantee that such approaches will result in any substantive proposal(s) emerging.

That was yesterday. SP ran from $3.75 to $4.20 but has slipped back. Was higher a month or so ago.

 

[Miner]

NICE Number now 12.13% reduction to cool down hot potato

 

[Dona Ferentes]

up 15% very early trade this morning, then the belated response

15/03/2022

10:14 am AEDT

Pause in Trading

 

[Miner]

up 15% very early trade this morning, then the belated response

15/03/2022

10:14 am AEDT

Pause in Trading

My procrastination to get rid off UWL yesterday has helped to wait and watch post trading halt. ?

 

[Dona Ferentes]

My procrastination to get rid off UWL yesterday has helped to wait and watch post trading halt.

and here's the story (from the AFR)

Infrastructure investor Morrison & Co is the suitor stalking Australian telecommunication services and fibre owner Uniti Group.

Street Talk understands Morrison’s team has been running due diligence on the business, seeking to firm up an offer valuing the company at about $3.1 billion on an equity value basis.

Morrison & Co’s interest is said to be advanced, and comes after Uniti Group flagged in January that it had received approaches from more than one party indicating potential interest in acquiring the company.

 

[Dona Ferentes]

My procrastination to get rid off UWL yesterday has helped to wait and watch post trading halt. ?

might be worth hanging on until the last encore

It is not known whether Morrison’s dealmakers are looking on behalf of the dual-listed Infratil, one of its unlisted funds or third-party clients, such as Future Fund or Commonwealth Superannuation Corp