Service Stream’s Stock Arrows Down On The Day Of Its 2018 AGM

service stream

Since the start of the day, Service Stream’s (ASX: SSM) shares are hitting the ground. So far, it has fallen 1.786% to trade at $1.650 on the day of its 2018 Annual General Meeting, 24 October 2018.

The provider of essential infrastructure network, Service Stream Limited (ASX: SSM) today concluded its financial year ended 30 June 2018. Fiscal 2018 has been a successful year for the company as it has achieved the top line growth of 26%, thereby delivering the earnings over and above the company’s expectations. As per the company’s full-year guidance for FY18, EBITDA was anticipated to be $64 million but at the end of the year the company has flagged actual EBITDA of $67.3 million, $3.3 million above the guidance and 39% more than that reported in previous FY17.

The bottom line has surged as high as 45% to report $41.1 million NPAT driven by the increased customer activation and maintenance service on nbn roll-out. The increase in nbn OMMA assurance & remediation volumes and growth in wireless and nbn design & construction activities under the MIMA & DCMA contracts have been the major driving forces for the company to deliver solid financial performance in FY18. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

Chairman Brett Gallagher addressed the recent capital management initiatives undertaken by the company. He stated that in order to satisfy the company’s FY17 and FY18 share-based incentive plans, the company has purchased on-market 8.7 million shares. Moreover, as announced in February 2018, the company has further completed the on-market buyback of 5.0 million shares which were duly cancelled after being bough back.

Looking into Fiscal 2019, Managing Director Leigh Mackender anticipated group’s EPS to grow by at least 10%. The growth in earnings per share is said to be based on increased customer demand and does not considers the impact of any capital management initiatives.

On segments wise outlook, company expects network construction to be relatively flat with increased earnings from the nbn DCMA contract offsetting lower expected wireless spend prior to the expected start of the 5G roll-out in FY20. Whereas, Energy and Water segment is forecasted to grow significantly, underpinned by full year’s contribution from recently secured Metering Service contracts and growth across commercial solar operations of the company.

In Fiscal 2018 the Board has declared total dividend of 7.5 cents, fully-franked, that was 67% above the previous year’s dividend.

SSM is trading at $1.650 as on 24 October 2018 (12:10 PM AEST). However, the stock has witnessed a strong growth of 22.18% over the past one year. The Service Stream’s share price is currently trading at a PE of 14.880 x with market capitalization of $606.83 million.


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