Vocus Communications Limited (ASX: VOC) has pulled the annoying stunt of releasing its results 15 minutes before the market opened. I've had a quick look at the report, and decided to add the company to the Hypothetical Ethical Share Portfolio at the last traded price of $3.52 (at the time of writing). [Edit: buy price will be $3.70 or closing price today... see comments below]. [2nd Edit: whoops I added it at $3.77 instead]
I regret not adding Vocus to the Hypothetical Portfolio at $3.10, where it traded just weeks ago. This is especially true because I bought shares in my own portfolio at those prices. That's life I guess.
I don't have time to write up the report (indeed, I've only scanned the numbers myself). However, the thesis expressed in this stock research on Vocus Communications holds. In fact, due to the growth in fibre revenues, I'd say that the moat is widening.
Here are my notes on the half yearly. The numbers are approximate, and the comparisons are with the immediately prior period (2H 2013). I don't believe the company is notably cyclical, so I don't care for prior corresponding period comparisons.
Vocus 1H 2014
Fibre and Ethernet Revenue growth of over 40% from $9.5 million to $13.2 million - slightly exceeds expectation
Data Centre from $8 million to $9.2 million growth of about 15% - meets expectations
Voice from $4.5 million to $3.8 million: contraction of 15% - under performs expectations
Internet from $14.5 million to $17.8 million growth of 22% - really exceeds expectations
Other observations: Capital Expenditure higher than expected. Depreciation and Administration were significant($9 million together) - capable of explaining the deficit between profit and cashflow. Cashflow up strongly for the half, to $13 million.
While depreciation and amortisation is real, I believe that much of the network equipment will outlast its depreciation period of 5 -30 years. Also, the Voice segment is the least important segment, so if any area can under-perform without breaking the thesis, then that's it.
The Author owns shares in Vocus Communications. Nothing on this website is advice, ever. The purpose of this blog is to keep track of my decisions and invite feedback
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