@lifecapital

I am a holder of ST1 IRL and SM.

I was a bit meh with the results yesterday. Things do look like they are improving, the company is profitable and should be a beneficiary to Australia opening up. For a growth company I would have wanted to see better results.

I believe the kick up in SP today is because of a report of Aussie Broadband looking to acquire a company and the report suggested that ST1 would be the most obvious acquisition from an analyst perspective. This was in the same report as OTW who is in a trading halt on the news. I think this is speculation and punters getting in on the possibility of this becoming a reality. Although I believe ST1 is a serious takeover option for someone I think this is not the time.

I will continue to hold ST1 I am a fan of the CEO who is developing a good business and has good direction. I like that they are selling low growth segments of the business to use that capital to hopefully acquire better growth options. The entire telecommunications segment is seriously interesting at the moment and I expect a lot of M&A to occur in the next 12 months.

Spirit divests consumer assets for $5.1m in an attempt to focus the business on more modern digital workplaces to the business market, from SMB to corporates. These markets a lot more profitable and attract larger and longer contracts.

further news from the announcement is that Spirit has received other offers for their fixed wireless towers which they are considering the proposals put forward.

I find this a positive not only as spirit is now a large enough business to focus on key areas of growth but also they now have cash to further capitalise on the consolidation occurring in the industry.

spirit is a one stop shop for all telco and IT needs and I find the managing director a really good leader. He is old fashioned, likes to run a profitable business and has a clear direction and pathway to grow the business.

I expect that there will be no acquisition announcements this year as they integrate the many made last year successfully including the larger one of nextgen.

I personally see ST1 undervalued currently and would not be surprised to see some form of takeover offer come through. They have some really good contracts with large corporates in government and education.

Disc: held IRL and SM

FY21 Revenue at $104.5 million up 200% YonY

H2 21 revenue grew 37% from $44 mil H1 Fy21 to $60.5 Mil H2 FY21

Recurring Revenue up 33% to $27.2 Mil

Strong balance sheet with $24.2 mil of cash available with further cash expected following the sale of consumer infrastracture assets. Net debt at $1.5 Mil

pleasingly provided FY22 Guidance of $150-155 mil up 44-48% on FY21 with underlying EBITDA forecast at $19.4-$20.2 mil up 68-75% from FY21.

The guidance reflects some nice organic demand occuring from recent acquisitions that were undertaken throughout FY21. We should now see some nice numbers coming from the business as integration of these businesses are achieved.

I firmly believe ST1 will be a takeover target from one of the bigger boys in town. I believe a lot of M&A will occur in this sector. A bit like BNPL this area is crowded and I think some consolidation will occur. With the above numbers $ST1 looks very attractive at this price.