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Summary
- Provider of mobile and energy plans, amaysim saw an upsurge in its share price by 12.5 per cent to $0.360, (on 2 June 2020) .
- amaysim, in its announcement addressing media speculation, confirmed its recent engagement with Luminis Partners to seek ways of unlocking the shareholder value, with respect to the energy business.
- amaysim witnessed an upward trend in the energy subscribers, with 203,000 subscribers on 20 February 2020.
It looks like June 2020 has begun on a good note for the investors in terms of boosting their earnings. Yesterday, on 1 June 2020, Whispir Limited (ASX:WSP), a Company which is relatively new on the ASX with a small market capitalisation saw a rise in its share price and closed with an increase of 7.627 per cent.
Good news on its way for the investors!
The second day of June morning saw the rise of amaysim Australia Limited (ASX:AYS) share price reaching its day high at $0.390. By the end of the trading session, AYS was at $0.360 on ASX with a considerable increase of 12.5% from its previous close. Interestingly, this upsurge was backed by the announcement that the company released today (2 June 2020) addressing a response to recent media speculation.
An Australia based fourth-largest mobile service provider, amaysim offers both mobile as well as energy plans.
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The question is, what was so unique in the announcement that boosted its share price? Well, the Company that works on the philosophy of putting out of their customers first with the delivery of clear, transparent and best mobile and energy plans has responded to media speculation with regards to the potential interest in its energy business.
Let’s enrich ourselves with this announcement which is in response to recent media speculation.
The announcement said that the provider keeps getting broad spectrum of interest concerning its businesses and as per AYS’ policy, they do not comment on, or engage with, market or media speculation.
The Company’s update apprised that as requested by the Australian Securities Exchange, it was confirming its engagement a while ago with the corporate advisory entity, Luminis Partners, to facilitate the board with consideration of various options to unlock the shareholder value in relation to the energy business.
The announcement also added that AYS keeps a data room for expediting discussions with the interested parties. AYS stated at the end that it was appreciative of its business’ overall performance in the current scenario. It further, confirmed its compliance with continuous disclosure obligations mentioned under the ASX Listing Rules.
Let us have a look at the impressive performance in the first half of FY 20 ending December 2019 (H1 FY’20)
Operational performance
AYS witnessed a y-o-y growth of 11.8 per cent in its recurring mobile subscribers (706,000) and 3.4 per cent in its energy subscribers (201,000) as of 31 December 2019. This inflation in growth can be attributed to the recent acquisitions, upcoming plans and financial standpoint of AYS.
Jeenee Mobile– The Strategic Acquisition
AYS expects to cement its position in the Australian MVNO business with the acquisition of 100 per cent of the mobile virtual network operator (MVNO), Jeenee Communications Pty Ltd on 29 November 2019 for the total consideration of $7.8 million. Also, the strategic rationale with the addition of Jeenee’s mobile subscribers of nearly 41,700 has brought AYS total recurring mobile subscriber base to 698,600 (as at 28 November 2019).
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Financial performance
AYS witnessed a y-o-y decline of 15.4 per cent in the ARPU (average revenue per subscriber) on the recurring mobile subscriber base to $22.34 during H1 FY’20 marked by the highly competitive mobile environment in 2018 and 2019 and the rising trend towards plans with higher inclusions. Also, ARPU declined of energy sources and reached $125.31 at the end of H1 FY’20 primarily due to lower energy usage across the customer base.
ARR vs ARPU for mobile services, (Source: Company’s Report)
AYS saw a y-o-y decline of 7.1 per cent in the net revenue to $244.4 million driven by lower ARPU across mobile and energy business. Underlying EBITDA saw a decrease of 17.9 per cent y-o-y and reached $24 million at the end of H1 FY’20.
While the underlying EBITDA for Energy business remained stable at $18.7 million, the Mobile underlying EBITDA dipped by 49.7 per cent because of the significant increase in marketing investment to aid the rise of subscribers. Also, Net PAT from continuing operations witnessed a growth of 177.5 per cent y-o-y and reached ~$3.7 million at the end of H1 FY’20.
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H1FY20 Key Financial Metrics (Source: Company’s Report)
AYS is on track to meet its FY20 guidance
AYS intends to reinvest in marketing initiatives to drive commercial and sustained viable growth. Also, AYS reaffirmed the underlying EBITDA between $33 million and $39 million taking into consideration seasonal lower energy consumption in the second half of FY 20 and assumed no material changes or adverse effects from the market conditions, operating environments and business circumstances.
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The Company’s response to recent media speculation reflected in the stock market wherein, AYS last traded at $0.360, flying high by 12.5 per cent compared to the previous closing price. The company has a market cap of $94.44 million and the outstanding shares were noted at 295.11 million.
AYS with a small market cap, growing ARR for mobile services, strong mobile outlook, continues to drive forward its strategic initiatives, which makes it an interesting stock to watch out for.
