MP1 - Megaport Limited

[Dona Ferentes]

I'd reckon some insto holder looked at the numbers (pretty ordinary looking increase in revenue of only 5% QoQ), plugged them into their modelling, added the new revised cost of capital / DCF assumptions, plus currency overlay, and then said "sell 'em" ... look for change of holding notice in the next few days?

 

[finicky]

James Gerrish goes up another notch by candidly stating they took a misstep in buying MP1 recently for their growth p/f. Not something you hear from R Montgomery. Says the item to focus on is number of 'ports' which grew only 1% QoQ which isn't enough for the high valuation.

Quote:

"Megaport $6.61
MP1 -22.14%: Opened around par this morning and traded higher initially following their quarterly trading update that showed only small growth in the number of ports added during the period while Capex was also higher than expected. Revenue of $23 million was +5% q/q with monthly recurring revenue up +3% q/q, however, the number that really counts is total ports which came in at 9,606, a growth rate of only +1% q/q which is not good enough. The market latched onto this, with some big volume going through after lunch and the stock slid ~20% as a result. A disappointing outcome for a stock we have recently bought in our growth portfolio ~ paying $7.82 at the end of last month.'

 

[rcw1]

1	FLT	FLIGHT CENTRE TRAVEL ORDINARY	15.09%	0.14
2	BET	BETMAKERS TECH GROUP ORDINARY	14.32%	0.39
3	SQ2	BLOCK CDI 1:1 NYSE	11.63%	0.44
4	MP1	MEGAPORT LIMITED ORDINARY	11.04%	1.21

ShortMan - Top 100 shorted stocks on the ASX

The top 100 shorted stocks on the ASX, by short position. The full list of shorted positions is also available for download.

www.shortman.com.au

 

[rcw1]

Good morning
Megaport shares were placed into a trading pause as the company corrected an error in its first quarter results on Wednesday.

The company says there was a mistake in the Australian dollar translation of the cash flow on its investor presentation.

The amended figures in the Australian dollar show that capital expenditure changes from a loss of $16m to $14.4m, while cash flow used in investing activity changes from minus $15.8m to $14.2m.

Net cash flow was now negative $12.3m compared to $13.9m on Wednesday, while the effect of FX movement changes went from $0.8m to minus $0.8m.

Megaport says no changes to the reported cash balances or to USD cash flow were made.

SP down 11.95% cent as at time of post.

Kind regards
Rcw1

 

[Dona Ferentes]

And quickly becoming another "gang that can't shoot straight".

 

[Dona Ferentes]

And another quarter of growth, albeit in single digits, with stickiness of uptake and all that . Then in the global update, the ominous Operational Efficiency.

Cost Out Program
● Major Cost Out program initiated in Q2
● $8M- $10M annual cost / cash savings identified across 7 workstreams
● Majority of savings related to consolidation of cloud on-ramps and network operations in part enabled by 100/400 Gbps upgrade investment
● Majority monthly cost reductions expected to be delivered by end of financial year.

Adjustment to Cloud VXC pricing
● Costs to interconnecting to legacy cloud on ramps have increased significantly over time
● Cloud VXC’s to legacy onramps have required additional investment in co-location, metro connectivity, equipment, and Cross connects.
● Review lead to a price adjustment of Cloud VXC to bring it in line with MCR and MVE VXC
● Effective from May, expected to deliver additional net $7M-$10M on annualised revenue
● There are no further changes to pricing for remainder of the product portfolio.

Further Strategic Review
● Engage external consultants to review operational efficiency within the business
● Focus on improved automation and work with new CRO on go-to-market strategy
● Likely engagement March/April

... And down 20 per cent. ...all that recent consolidation gone.

 

[UMike]

Still AI rates it.
New to this and enjoyed catching up on this stock by reading your contributions.

I'll wait till the Knife stops falling and see if it bounces.

 

[Dona Ferentes]

I'll wait till the Knife stops falling and see if it bounces.

This is one of the more heavily shorted stocks, so I guess if that horde decides it's had enough, then there might be snapback. Otherwise, more of the same?

 

[Dona Ferentes]

Miss the quarterly numbers, and there's an inglorious rush to the exit. As low as $5.51 and closed 25% down.

 

[Dona Ferentes]

Numbers out for Megaport. Early on, puts on 50c but gives it up and more, just as quickly. Now back under $6.

 

[Dona Ferentes]

Clearly a surprise. And not a good look, down 6%.

EDIT; make that 10%; as low as $5.02 on early jockeying

 

[Dona Ferentes]

And not a good look, down 6%.
EDIT; make that 10%; as low as $5.02 on early jockeying

Let's just call it 15% ... didn't get any better during the day.

 

[finicky]

MP1 @ 4.80

Obvious comment, but MP1 is at a precarious level and I can't see much in the charts to take heart from. That could change in a day though I guess with a bounce at this level which is the the previous low, or we might get a spring from a false break. But the big daily volumes have been negative and momentum divergence unconvincing. If I had to punt I'd say lower, but in a meek voice as I sometimes comment like this at a bottom.

Henry Jennings was promoting this back in late January on livewire - "dogs of the asx 2022 to outperform in 2023". I think he wines and dines a bit much.

I'm putting in the monthly chart because it best shows the weakness of the recent rally to me. Not yet much recovery after the broken Bollinger band. GLAH

Not Held

Decade Monthly

 

[finicky]

MP1 @ 4.08
Closed on its low for the day. It's entered the range bound zone that it inhabited 2018-19 which was between $4.50 and $3m (see thumb chart)

Not Held
Maybe an opportunity coming up if the talking heads know anything?

All Data

 

[dyna]

If anybody knows anything, they too , would hold off , in any case .
Better to catch it on the upside , if that ever comes.
That chart looks sooo horrible . Have to say no , for now.
Nothing wrong with holding cash , after all.

 

[dyna]

Those big volumes of the last six months shows what the market thinks of the stock.
She's doomed .
Here we are only 9 weeks away from the end of the fiscal year when the dumping will get pretty severe.
Results will have to improve, next year.... or else.

 

[Dona Ferentes]

New CEO and the market initially sells off, to 3.83 ... now a bit above earlier close at 4.09

Local boy made good? Ex QUT.

 

[Dona Ferentes]

New CEO and the market initially sells off, to 3.83 ...

MP1 was below $4 at yesterday's close. .... a pretty heavily shorted stock, so we'll see what happens today

Megaport says that as a result of various initiatives designed to improve the company’s operating and financial performance and cash generation, it now expects earnings to be “materially above” market consensus.

Megaport now expects normalised EBITDA in FY23 in the range of $16 million to $18 million, and normalised EBITDA in FY24 in the range of $41 million to $46 million.

That is above market consensus of $9 million in FY23 and $30 million in FY24

 

[finicky]

Wow explosive move today on guidance of fy23 and fy24 EBITDAs which substantially beats 'consensus'.
Will it sustain the obvious question - I did a primitive calc of market cap multiple to EBITDA (guidance) for fy24 and got 21X

market cap on 45% intraday rise = $920m
Mid range fy24 EBITDA guidance = $44m
M.C ÷ EBITDA = 21X

Not Held

 

[Dona Ferentes]

Wow explosive move today on guidance of fy23 and fy24 EBITDAs which substantially beats 'consensus'.

And holding. 45% up