Earlier today mobile telecoms retailer Amaysim Australia Ltd (ASX: AYS) released its 2016 results. Revenue was up 19.2% to $253.5 million and underlying net profit after tax (NPAT) was up 110.5% to $20 million.
However, when adjusting for amortisation of non-recurrent acquired intangibles, underlying NPAT was up an even more impressive 118.6% to $22.3 million. Growth in underlying earnings-per-share (EPS) of 94.8% was also strong.
The company declared a final dividend of 5.3 cents taking the total for the year to 8.3 cents per share, representing a healthy 4% yield at current prices.
The result was boosted by the acquisition of Vaya Pty Limited in January which added 140,000 extra subscribers to the company's subscriber base. However, Amaysim also added 108,000 subscribers organically, representing a further 15% increase over last year.
Continued profit growth looks likely given the company's recent decision to enter the broadband market in anticipation of what it describes as a "critical churn event" as people switch over to the NBN. The number of active NBN services is expected to increase from 0.9 million in 2016 to 8.8 million by 2023 and the company is hoping to capture a decent chunk of subscribers making the transition.
Perhaps most impressively, Amaysim managed to improve its gross margins by 570 basis points to 33.7% during the year, aided by a 100 basis point reduction in churn to 2.5%. These results were driven by various management activities designed to improve efficiency including continued focus on the company's self-care customer service.
First half underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were $12.6 million and $35.4 million for the full-year. Therefore, second half underlying EBTIDA was a huge $22.8 million setting the company up for around $50 million EBITDA in 2017 by my estimates, including some moderate organic growth.
Given the company has no debt and little capital requirements I reckon it is on track to deliver NPAT of $30 million in 2017 after adjusting for amortisation of non-recurrent acquired intangibles. With a market capitalisation of just $370 million, Amaysim has a forward price-to-earnings ratio of 12.3 and looks very reasonably priced given its exciting growth prospects.
