Tech: Superloop’s undersea internet cables are up and running, shares bounce
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Online infrastructure company Superloop (ASXZ: SLC) is now carrying “live traffic” along its trans-national undersea fibre connection cables.
The company’s cable network runs along the south coast of Australia from Sydney to Perth, and from Perth up to Singapore.
Superloop said it’s also testing for impairment on its problematic SaaS division, after revenues fell 30 per cent, and has cut back on costs.
The net result is that underlying earnings forecasts for the 2020 financial year have been estimated at $14-16m, around double FY19 earnings.
Shares in SLC climbed more than 10 per cent in morning trade:
It’s been a turbulent few months for the tech hardware company, highlighted by a collapsed takeover bid in May.
The government-backed Queensland Investment Corporation (QIC) lobbed an initial takeover offer at $1.95, a premium of around eight per cent to SLC’s share price at the time.
But it failed to result in a deal, which saw the stock fall back to around $1.50. An updated FY19 earnings downgrade at the start of July then prompted a fall back below $1.
Superloop says the Australian component of its network is now operational for “all 121 NBN POIs (points of interconnection)”.
“With master service agreements in place with many global service providers, and with domestic fibre networks now live and billing, we expect to see continued connectivity growth in FY20 and beyond,” CEO Drew Kelton said.
Revenue from the SaaS division — which contributes around 10 per cent to group earnings — continued to fall. The carrying value of the division is $60m which includes $43m of goodwill, which is now “being assessed for non-cash impairment”.
Expected FY20 underlying earnings of $14-16m are around double the $7-8m expected for FY19 following the earnings downgrade in early July.
The company said that forecast earnings don’t include the potential for large infrastructure transactions on the Superloop network.
“The evolution of the way fibre infrastructure is purchased by major customers provides Superloop with a significant opportunity,” the company said.
Buy now, pay later platform Zip Co (ASX: Z1P) has announced another commercial partnership, this time with Big W — a subsidiary of Woolworths. “It is anticipated that Zip will be live with Big W within the first half of FY20,” the company said.
Shares in Z1P rose by around five per cent in morning trade, and the stock is up by around 250 per cent in FY19.
And shares in family photo-sharing platform Tinybeans (ASX: TNY) rose almost eight per cent to to $1.16, after the company announced a $5m share placement at $1, which included the backing of billionaire Alex Waislitz’s Thorney Investment Group.
“The funds will be used to accelerate growth across the sales, marketing and product areas of the company,” Tinybeans said.