Communication Services Stocks Kick Start 2020 - LAA, 5GN, FRX, UNL

  • Jan 10, 2020 AEDT
  • Team Kalkine
Communication Services Stocks Kick Start 2020 - LAA, 5GN, FRX, UNL

2019 was a good year for communication services stocks, and the sector delivered growth of 25.42%. Additionally, the sector grew by 6.65% during the 2 January 2020 to 10 January 2020 period.

On 9 January 2020, the S&P/ASX 200 Communication Services (Sector) closed at 1,338.9, up 1.42% from previous close, while benchmark index S&P/ASX 200 closed at 6,874.2, up 0.82% from last close. Several stocks under this sector performed well on 9 January 2020, with stocks like LAA, 5GN, UNL and FRX skyrocketing on ASX by the market close.

LatAm Autos Limited (ASX: LAA) closed 24% above its previous closing price at $0.031. Around 3,411,171 shares were traded on ASX. LAA had a market cap of $14.8 million and ~ 591.87 million outstanding shares, on 9 January 2020.

5G Networks Limited (ASX: 5GN) closed at $0.795, up 8.163% from its previous close. Around 344,944 shares were traded on ASX by the end of the market close. As on 9 January 2020, 5GN had a market cap of $48.2 million and approximately 65.58 million outstanding shares.

Flexiroam Limited (ASX: FRX), closed at $0034, up 13.33% above its previous closing price. Around 33,500 shares were traded on ASX. FRX had a market cap of $9.16 million and ~ 305.2 million outstanding shares.

United Networks Limited (ASX: UNL) also closed 10.345% above its previous close at $0.032, with a market cap of $11.38 million and ~ 392.38 million outstanding shares.

Let’s look at the recent development of these companies:

LatAm Autos Limited Reports All-Time Sales Record for Motorfy

LatAm Autos Limited (ASX: LAA) is the top online classifieds & content platform in the Latin American automobile industry, and operates in six nations across the continent.

On 9 January 2020, LatAm Autos reported an all-time sales record for its Mexican credit FinTech business, “Motorfy” during November 2019 with Motorfy Mexico registering a record in the history of the company for December 2019.

For 4Q 2019, the company reported an all-time record for revenue for Motorfy Credit Mexico along with all Motorfy products combined in Mexico.

  • Unit sales for the Motorfy Credit Mexico product in the fourth quarter of 2019 increased by 33% as compared to the previous corresponding period.
  • In December 2019, Motorfy Credit Mexico product sales grew by 17% from December 2018 and 111% from December 2017.
  • Sales of Motorfy Credit Mexico during November 2019 increased by 71% as compared to November 2018.
  • There was a strong macro tailwind with the no. of used cars funded in Mexico at an all-time high for the YTD to October 2019, up 12% from its previous record in 2018.
  • The operational cost reduction initiatives that were announced during October 2019, started to be implemented in November 2019. As a result, there was a decline in total costs during November 2019 from the prior month.

5G Networks Limited Announces Servers Australia as Initial Partner

5G Networks Limited (ASX: 5GN), a licenced telecommunications carrier operating across Australia, announced the introduction of Servers Australia as the initial partner for its recently unveiled indirect channel. The channel agreement is for an initial period of 2 years with a minimum expenditure of $750,000 during this period.

5GN would be offering data centre capacity to Servers Australia, covering data centres in Sydney, Melbourne and Adelaide. Through this agreement, Servers Australia would be able to resell the 5GN Cloud solution along with high-speed fibre networking which would connect the geographically diverse data centres securely to a nationwide high-speed network presence.

1H FY2020 Revenue for Flexiroam Up 70%

Flexiroam Limited (ASX: FRX) is a global connectivity provider, engaged in providing data access to travellers, globally.

The company at the end of November 2019 updated the market with 1H FY2020 results for the period ended 30 September 2019 and reported an increase of 70% in revenue to $4,673,369. The loss for the period was noted at $942,844, down 16% from its previous corresponding period. EBITDA improved by 24%, while cumulative subscribers continued to increase at a compounded growth rate of 38% for every six months.

The company was able to raise $1.23 million via a Renounceable Entitlement Offer to fund its future business growth strategies & current working capital requirements.

United Networks Limited Acquires Telecommunications Service Providers

United Networks Limited (ASX: UNL) is into the telecommunications business and specialises in voice, data along with value-add services. Its offerings comprise of local telecommunications services, global roaming SIM cards, location-based services like emergency services & newly introduced Wi-Fi solutions.

In December 2019, the company finalised the acquisition of Symmetry Networks Pty Ltd and NextCom. The company acquired the two telecommunications service providers in accordance with its objective to increase recurring revenue. Moreover, the acquisitions are highly EPS accretive with low double-digit earnings growth expected over FY2020.

The acquisitions would be funded from current cash flows of the company and are unlikely to require any capital raising. The acquisitions would support the company in achieving further efficiencies across its service provider business while opening up cross-selling prospects for the global & mobile business units.

Stock Update - 10 January 2020

On 10 January 2020, the S&P/ASX 200 Communication Services (Sector) again inched upward by 1.23% and closed the day’s trade at 1,355.6 while benchmark index S&P/ASX 200 also settled in green, up 0.79% from its last close to 6,929.0. Below table depicts the performance of the above-discussed stocks on ASX on 10 January 2020.


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