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Growth Portfolio: MNF Group Ltd (ASX: MNF)

Published 24-NOV-2016 00:00 A.M.


2 minute read

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Overview: MNF Group Ltd ("MNF Group", "the Company"), formerly My Net Fone Limited, is an Australian technology company providing internet-based telecommunication services. MNF operates IN three divisions being Domestic Retail, Domestic Wholesale, and Global Wholesale offering Voice over Internet Protocol (‘VoIP’) data and video services to residential and business enterprises. MNF Group listed on the ASX in 2006.

Catalysts: MNF Group has increased revenue every year since listing in 2006 and over the past five years revenue has grown at a compound annual growth rate of 64%. Growth is achieved through a mix of organic expansion and acquisitions and continuation of this trend is the major value driver. MNF Group has consistently paid dividends and rising earnings could allow for higher distributions in the future. Management has a proven track record of value creation within the industry.

Hurdles: As management targets growth via acquisitions, MNF faces integration and funding risks. There is no guarantee that the required capital can be procured, nor that acquisitions will yield a return on shareholder funds. MNF operates in a mature market and there is a risk that the market reaches saturation at a cyclical peak.

Investment View: MNF Group offers profitable exposure to demand for internet and cloud-based telecommunication services. We are attracted to the company’s growth trajectory, ability to distribute dividends, and management track record. Integration and market saturation risks are primary hurdles. MNF Group’s share price appreciation has been driven by consistent revenue and earnings growth and acquisitions have been well integrated to date. Attracted to the Company’s unique position in the market and recognising the MNF Group’s growth potential we initiate coverage with a ‘buy’ recommendation.


General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

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