Small Caps | Oct 29 2015
-Guidance downgrade due to intangibles
-Adding 50 more staff over 12 months
-Momentum in new business continues
By Eva Brocklehurst
MyNetFone ((MNF)) continues to invest in growth. At its AGM the company revised down FY16 profit guidance, largely to incorporate amortisation charges in relation to the acquisition of Telecom New Zealand's global wholesale voice business, completed in April.
Canaccord Genuity notes, excluding the impact of intangibles, guidance implies profit of $9.4m. The broker revises earnings estimates for FY16 down by 2.9%, largely because of the ongoing investment in personnel for further growth.
The company has signalled that the new business continues to show positive momentum with customer growth of 8.0% in the first six months since acquisition. The broker highlights a lag of 3-6 months in delivering revenue benefits.
It appears the company is adding around 50 extra staff over the next 12 months in engineering, sales and operations. The broker has no concerns regarding the longer-term opportunity for MyNetFone and a Buy rating and $4.05 target, reduced from $4.20, are in place. The company has guided to earnings of $17.3m in FY16.
Canaccord Genuity's capital expenditure assumptions remain in line with guidance of $5m for FY16, which should fall to around $2m in FY17. Guidance includes a non-cash amortisation charge of $1.4m in FY16. On an adjusted basis FY16 and FY17 earnings per share are forecast at 14c and 18.9c respectively.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
