ASX:MP1

Stock Analysis Report

Executive Summary

Megaport Limited provides elastic interconnection services to the enterprises and service providers in Australia, the Asia-Pacific, North America, and Europe.

Rewards

Revenue is forecast to grow 31.89% per year

Revenue grew by 77.5% over the past year

Risk Analysis

Currently unprofitable and not forecast to become profitable over the next 3 years

Highly volatile share price over past 3 months

Shareholders have been diluted in the past year



Snowflake Analysis

Excellent balance sheet with limited growth.

Share Price & News

How has Megaport's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: MP1's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

1.6%

MP1

2.6%

AU IT

0.1%

AU Market


1 Year Return

203.8%

MP1

34.7%

AU IT

19.5%

AU Market

Return vs Industry: MP1 exceeded the Australian IT industry which returned 34.4% over the past year.

Return vs Market: MP1 exceeded the Australian Market which returned 19.4% over the past year.


Shareholder returns

MP1IndustryMarket
7 Day1.6%2.6%0.1%
30 Day5.4%10.5%4.0%
90 Day21.8%16.9%4.8%
1 Year203.8%203.8%37.2%34.7%24.9%19.5%
3 Year372.1%372.1%66.6%53.6%39.7%20.9%
5 Yearn/a143.6%114.0%59.0%23.1%

Price Volatility Vs. Market

How volatile is Megaport's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Megaport undervalued compared to its fair value and its price relative to the market?

13.8x

Price to Book (PB) ratio


Share Price vs. Fair Value

Below Fair Value: MP1 (A$10.88) is trading above our estimate of fair value (A$1.45)

Significantly Below Fair Value: MP1 is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: MP1 is unprofitable, so we can't compare its PE Ratio to the IT industry average.

PE vs Market: MP1 is unprofitable, so we can't compare its PE Ratio to the Australian market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate MP1's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: MP1 is overvalued based on its PB Ratio (13.3x) compared to the AU IT industry average (2.7x).


Next Steps

Future Growth

How is Megaport forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

53.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MP1 is forecast to remain unprofitable over the next 3 years.

Earnings vs Market: MP1 is forecast to remain unprofitable over the next 3 years.

High Growth Earnings: MP1 is forecast to remain unprofitable over the next 3 years.

Revenue vs Market: MP1's revenue (31.9% per year) is forecast to grow faster than the Australian market (3.8% per year).

High Growth Revenue: MP1's revenue (31.9% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MP1 is forecast to be unprofitable in 3 years.


Next Steps

Past Performance

How has Megaport performed over the past 5 years?

-37.2%

Last years earnings growth


Earnings and Revenue History

Quality Earnings: MP1 is currently unprofitable.

Growing Profit Margin: MP1 is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: Insufficient data to determine if MP1's year-on-year earnings growth rate was positive over the past 5 years.

Accelerating Growth: Unable to compare MP1's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: MP1 is unprofitable, making it difficult to compare its past year earnings growth to the IT industry (60.9%).


Return on Equity

High ROE: MP1 has a negative Return on Equity (-30.35%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Megaport's financial position?


Financial Position Analysis

Short Term Liabilities: MP1's short term assets (A$85.1M) exceed its short term liabilities (A$14.2M).

Long Term Liabilities: MP1's short term assets (A$85.1M) exceed its long term liabilities (A$2.1M).


Debt to Equity History and Analysis

Debt Level: MP1's debt to equity ratio (2.3%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if MP1's debt to equity ratio has reduced over the past 5 years.


Balance Sheet

Inventory Level: MP1 has a high level of physical assets or inventory.

Debt Coverage by Assets: MP1's debt is covered by short term assets (assets are 33.2x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: MP1 has sufficient cash runway for more than a year based on its current free cash flow.

Forecast Cash Runway: MP1 has sufficient cash runway for 2.8 years if free cash flow continues to reduce at historical rates of -20.3% each year.


Next Steps

Dividend

What is Megaport's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%2.3%markettop25%5.5%industryaverage2.3%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate MP1's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate MP1's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if MP1's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if MP1's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of MP1's dividend in 3 years as they are not forecast to pay a notable one for the Australian market.


Next Steps

Management

What is the CEO of Megaport's salary, the management and board of directors tenure and is there insider trading?

3.0yrs

Average management tenure


CEO

Vincent English 0

2.8yrs

Tenure

AU$2,065,029

Compensation

Mr. Vincent English has been the Chief Financial Officer at Digicel Group since 2005. Mr. English assumed responsibilities during an aggressive growth time in its evolution, with nine country mobile phone  ...


CEO Compensation Analysis

Compensation vs Market: Vincent's total compensation ($USD1.43M) is above average for companies of similar size in the Australian market ($USD959.05K).

Compensation vs Earnings: Vincent's compensation has increased whilst the company is unprofitable.


Management Age and Tenure

3.0yrs

Average Tenure

Experienced Management: MP1's management team is considered experienced (3 years average tenure).


Board Age and Tenure

1.8yrs

Average Tenure

Experienced Board: MP1's board of directors are not considered experienced ( 1.8 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyAU$33,674,59007 Nov 19
First Sentier Investors (Australia) IM Ltd
EntityCompany
Shares3,701,370
Max PriceAU$9.99
SellAU$3,050,00021 Jun 19
Simon Moore
EntityIndividual
Shares500,000
Max PriceAU$6.10
BuyAU$9,881,02717 Mar 19
Capital Research and Management Company
EntityCompany
Shares2,527,117
Max PriceAU$3.91
SellAU$19,999,99313 Mar 19
Bevan Slattery
EntityIndividual
Role
Chairman of the Board
Founder & Non Executive Chairman of the Board
Shares5,000,000
Max PriceAU$4.00

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 15.9%.


Management Team

  • Pete Hase

    Chief Commercial Officer

    • Tenure: 0.9yrs
    • Compensation: AU$1.01m
  • Bevan Slattery (48yo)

    Founder & Non Executive Chairman of the Board

    • Tenure: 4.5yrs
    • Compensation: AU$242.25k
  • Steve Loxton

    Chief Financial Officer

    • Tenure: 1.9yrs
    • Compensation: AU$1.07m
  • Darren Wilson

    Operations Director

    • Tenure: 1.4yrs
  • Brynn Maddux

    Executive Vice President of Terraforming Americas

    • Eric Troyer

      Chief Marketing Officer

      • Tenure: 4.3yrs
    • Vincent English

      CEO & Director

      • Tenure: 2.8yrs
      • Compensation: AU$2.07m
    • Brent Van Dussen

      Principal Engineer

      • Celia Pheasant

        Company Secretary

        • Tenure: 4.5yrs
      • Anna Tichborne

        General Counsel

        • Tenure: 3.3yrs

      Board Members

      • Jay Adelson

        Non-Executive Director

        • Tenure: 0.8yrs
        • Compensation: AU$34.16k
      • Bevan Slattery (48yo)

        Founder & Non Executive Chairman of the Board

        • Tenure: 4.5yrs
        • Compensation: AU$242.25k
      • Vincent English

        CEO & Director

        • Tenure: 2.8yrs
        • Compensation: AU$2.07m
      • Naomi Seddon

        Non-Executive Director

        • Tenure: 0.6yrs
        • Compensation: AU$7.50k

      Company Information

      Megaport Limited's company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: Megaport Limited
      • Ticker: MP1
      • Exchange: ASX
      • Founded: 2013
      • Industry: Internet Services and Infrastructure
      • Sector: Software
      • Market Cap: AU$1.629b
      • Shares outstanding: 143.88m
      • Website: https://www.megaport.com

      Location

      • Megaport Limited
      • 825 Ann Street
      • Level 3
      • Fortitude Valley
      • Queensland
      • 4006
      • Australia

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      MP1ASX (Australian Securities Exchange)YesOrdinary SharesAUAUDDec 2015
      MP1CHIA (Chi-X Australia)YesOrdinary SharesAUAUDDec 2015
      MGPP.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDDec 2015

      Biography

      Megaport Limited provides elastic interconnection services to the enterprises and service providers in Australia, the Asia-Pacific, North America, and Europe. The company operates a platform that enables customers to connect their network to other services. It also offers Internet exchange services. The company was founded in 2013 and is headquartered in Fortitude Valley, Australia. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/28 10:51
      End of Day Share Price2020/01/28 00:00
      Earnings2019/06/30
      Annual Earnings2019/06/30


      Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.