2 exciting ASX growth shares that might be worth buying

Pinnacle is one of the two ASX shares in this article that might be an exciting opportunity.

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There are a group of ASX shares that might be exciting ideas because of the business growth that they are generating.

The below companies are ones that are producing fast double digit profit growth and have plans for more growth to come:

Pinnacle Investment Management Group Ltd (ASX: PNI)

Pinnacle is an asset manager outfit. It takes strategic stakes in some of the leading asset managers in the country and helps them grow, as well as allowing them to just focus on the investing side of things.

Some of the managers that it's invested in includes Firetrail, Coolabah, Hyperion and Plato.

One of the brokers that likes Pinnacle Investment Management is Macquarie Group Ltd (ASX: MQG).

Pinnacle can grow profit as its affiliate fund managers grow their funds under management (FUM). Macquarie believes Pinnacle's FUM can grow to $90 billion by the end of FY21.

The rising FUM is lead to growing profits, and is leading the broker to expect that profit growth can continue for at least the next couple of financial years. Net inflows and improving profit margins can help the business continue to produce returns.

In the ASX growth share's latest update, total affiliate FUM at 30 April 2021 was $84.9 billion, compared to $70.5 billion at 31 December 2020 (up 20.4%) and compared to $58.7 billion at 30 June 2020 (up 44.6%).

Total net inflows for the four months to 30 April 2021 was $9.9 billion. That included $8.1 billion of institutional money (including $1.2 billion from offshore). It also saw $1.8 billion of retail inflows.

Pinnacle recently said that most affiliates and strategies continue to deliver performance to expectations, or better. However, there are short-term challenges in a couple of affiliates.

In the FY21 half-year result it grew net profit by 120%.

According to Macquarie, the Pinnacle share price is valued at 25x FY22's estimated earnings.

MNF Group Ltd (ASX: MNF)

MNF Group is a telecommunications software business. It boasts that it enables companies like Zoom, Google and Twilio to launch and scale communication services without constraints.

It's currently rated as a buy by the broker Morgan Stanley with a price target of $6.30. That suggest a potential return of almost 20% over the next 12 months.

The broker likes the recent sale by MNF of part of its direct business to Vonex Limited for $31 million. The sale is in-line with the ASX growth share's strategy to simplify the business, grow recurring revenue and focus on growing the MNF wholesale business, Symbio.

The business is generating growth. In the FY21 half-year result, it saw recurring revenue growth of 15% to $55.7 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 16% to $19.6 million and underlying net profit jumped 30% to $8.4 million.

MNF is guiding that EBITDA for FY21 will be between $40 million to $43 million.

In Singapore it's conducting its final technical trials with several customers, before officially going live in the Singapore market. Customer technical trials are ongoing and have been successful. It had a go-live date of 1 July 2021, pending final regulatory approval.

According to Morgan Stanley, the MNF share price is valued at 19x FY22's estimated earnings.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended MNF Group Limited. The Motley Fool Australia owns shares of and has recommended MNF Group Limited and Macquarie 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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