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Added 6 months ago
#Bear Case

TIme to sell. Too expensive. The recent 4C is troubling. https://www.asx.com.au/asxpdf/20190723/pdf/446sxv75mf62d4.pdf

It shows that the COGS keeps going up with sales. FY 2018 was about 84%. FY 2019 is about 78% ($26M). Staff and admin cost for 2019 are about $33M. Whilst record sales $33M, COGS is $26M and then still $33M of admin costs. On top of this they are spending capital to expand network ($5M/qtr).

To achieve a P/E of 50 they need $16.5M NPAT. To get that with $33M staff/admin costs and 60% COGS, they need revenue of $123M. Revenue in 2019 was $33M up from $19M in 2018

 
Added 6 months ago
#Broker/Analyst Views

23 July 2019:  The following link will take you to a research note from CG - Canaccord Genuity Capital Markets - who have just raised their PT (price target) for MP1 (Megaport) from $4 to $7, but seeing as MP1 are trading at over $7.50 today, it's little wonder CG have MP1 as a "hold" rather than a "buy".

https://canaccordgenuity.bluematrix.com/sellside/EmailDocViewer?encrypt=b254afd1-37d5-4bde-bf3b-5a2d79f72339&mime=pdf&co=Canaccordgenuity&id=Michelle.McAllister@asx.com.au&source=mail

 

 
Last edited 6 months ago
#Summary

Megaport provides software defined data links between data centres and benefits from the shift for business to use cloud services. Roughly 70% enterprises are adopting a hybrid-cloud strategy with most have two of more cloud service providers. This means that enterprises need to connect from their own private hosting arrangements to one or more cloud service providers. Megaport enables connectivity to the top 5 cloud service providers - AWS, Azure, Google, Alibaba and Oracle. Megaport is unique because it allows customers to acquire data links in minutes via its web portal rather than months it currently takes. It procures access to dark fibre (not owning it) and provides the services on top to get access to the cloud service providers. With this in place Megaport customers can use the web portal to define what they want and pay on a monthly service basis - just like software as service or infrastructure as a service that the cloud service providers provide. Megaport are providing a global Network as a Service Megaport is an enabler and not a competitor for cloud service providers. It allows them to extend their reach. Megaport was founded by Bevan Slattery, who is now chairman. He owns 33M of the 88M shares on offer.. He has also founded NextDC and Supoerloop wihich are both ASX listed companies as well as Pipe Networks and Asia Pacific Data Centres which were listed but have been acquired. Customers include NewsCorp, JB HiFi, and Woodside. Megaport operate in Asia Pacific, Europe and US. Asia Pacific is the most mature and US only a couple years old. US is a major focus.

 
Last edited 4 months ago
#Bull Case

Megaport is a provider of elasticity connectivity and network services.  It has a global presence of 185 locations across 46 markets.  There is intrinsic risk involved with an investment such as this, as the market can be fickel with overvalued tech shares, but it has shown continuous growth with a desirable service.  I beleive in the long term future of the company, but you know who you are as an ivestor, and have to be comfortable with the potential risk you'll be taking on.  With the latest pullback, this price of $3.85 seems like a reasonable entry point.

Refreshing this report showed how I underestimated the company.  Whether goes higher at the same pace is questionable, but they seem to be doing many things right.  Long term hold.

 

 

 
Added 2 weeks ago
#Baggy or Rulebreaking

A Baggy I may becomin'

But this stock is one I am in

I like the overall plan

Though the price is rather blan...d

 
Last edited 3 days ago
#Management

Saturday 19-Jan-2019:  This is another company founded by Bevan Slattery.   He either founded or co-founded Pipe Networks (sold to TPG Telecom in 2010 for $373 million), NextDC (NXT), MP1 and Superloop (SLC).  He has sold out of NXT (and no longer has any involvement in that company), sold down his shareholding in MP1 to 22.34% in 2018, and also stepped back from the CEO role at SLC last March (he still holds 26.76% of SLC).  The following is a very interesting article about Megaport and Bevan Slattery:

http://www.afr.com/business/telecommunications/bevan-slattery-says-megaport-was-two-years-too-early-for-its-customers-20180613-h11cb9

I used to own shares in NXT, MP1 and SLC but have now sold them all, and all at good profits.  I became concerned about SLC in the first half of last year (2018) and I posted a straw about them at the time (under Superloop - SLC).  My main concerns were over key management leaving the company (head of Marketing, plus the founder of BigAIR, plus their CFO) and Slattery stepping back from the CEO position into a lesser role.  SLC (Superloop) went from $2.52 at the end of June 2018 to finish 2018 (December 31st) at $1.52, having bottomed out at $1.40 earlier in the month.  They closed the day yesterday (January 18th) at $1.48, and their chart is not pretty (unless you're short SLC). 

MP1 is holding up currently, but it doesn't look like one of the best opportunities in the market to me.  If you read the article (link above), you may understand why.  Slattery is a serial entrepreneur and has a happy knack of seemingly being in the right place at the right time - in terms of knowing what physical infrastructure would be required for the next generation of telecommunications (and computer data).  However, he's probably already shifted focus onto his next big idea.  I would argue that the best profits have already been made with MP1.  There is money to be made from following Slattery, but perhaps not if you hold on too long - as SLC has shown.  MP1's best days might be ahead of it, but then again...

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Last edited 4 months ago
#Bull Case