2 small cap ASX shares that are growing quickly

These 2 small cap ASX shares are growing very quickly and may be compelling investments. One of them is MNF Group Ltd (ASX:MNF).

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There are some small cap ASX shares out there that are growing quickly.

Businesses that are fairly small but increasing in size can unlock growing profit margins, which helps the bottom line.

Over time, a smaller business can turn into a mid-cap if it can keep capturing market share.

MNF Group Ltd (ASX: MNF)

What does MNF do? It's a business that develops and operates a global communications network and software. It helps the new generation of companies help customers with their communication needs.

The business has a number of strategic priorities to continue growing.

It's targeting 20% year on year growth in domestic markets. MNF wants to grow its strategic customers and build its direct channel partner business.

Global growth is an important part of the plan. It's looking to generate revenue from its Singapore network. The small cap ASX share also wants to expand the reach of its platform into new Asia-Pacific countries.

MNF wants to continue to be strong in its existing markets by building on its brands with its network and software capabilities.

It also wants to automate and scale its core platforms to support long term growth.

The FY21 half-year result saw growth. Recurring revenue rose 15% to $55.7 million as a result of growing wholesale revenue. Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 16% to $19.6 million, underlying net profit increased 30% to $8.4 million and earnings per share (EPS) jumped 62% to 7.83 cents.

MNF says it's on track to deliver EBITDA of between $40 million to $43 million in FY21.  

City Chic Collective Ltd (ASX: CCX)

City Chic is aiming to be a world leader in the retailing of apparel, footwear and accessories to plus-size women.

The small cap ASX share is using a number of different brands to try to win in various markets. City Chic itself has a strong market share position in Australia.

It acquired the Avenue business in the US, which is a huge potential market. It's now using the Avenue website to sell City Chic products.

In the UK, City Chic has acquired the impressive Evans business which already has a large online presence.

City Chi is seeing good margin accretion despite the high levels of investing that the company is doing globally, plus all the COVID-19 impacts.

The FY21 half-year report saw total sales increase by 13.5%, underlying EBITDA growth of 21.8% and statutory net profit growth of 24.8%. The underlying EBITDA margin increased from 18.2% to 19.6%.

A key part of the growth is online sales. Half-year online sales increased by 42%, representing 73% of total sales for the period.

City Chic is now a truly global business, with 45% of sales coming from the northern hemisphere, where there's a much larger growth opportunity.

The small cap ASX share is seeing continued growth in the second half and numerous new initiatives to cross-sell products between customer bases, grow into Europe and restart partnerships.

It's currently rated as a buy by the broker Macquarie Group Ltd (ASX: MQG) with a price target of $5.20. City Chic is growing even faster than the broker had been expecting.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and MNF Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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