Superloop Limited (ASX: SLC) shares are down more than 13% this morning following a big FY19 earnings downgrade. Here’s what you need to know.
About Superloop
Superloop is an independent provider of connectivity services within the Asia Pacific metro region. It operates a network of fibre and wireless assets in Australia, Hong Kong and Singapore and aims to benefit from the exponential growth in data consumption.
Earnings Downgrade
Superloop released its 1H19 Investor Presentation in February this year, including FY19 statutory EBITDA guidance of between $13 million and $18 million (read more about EBITDA here).
Today, guidance has been downgraded and the company now expects EBITDA to be between $7 million and $8 million.
The nearly 50% cut to guidance is a result of negotiations for a commercial agreement taking longer than expected. While this agreement would’ve significantly increased EBITDA, Superloop was unable to finalise the contract before 30th June.
Superloop noted that the negotiations are still ongoing and will be reflected in future earnings if they are successful.
Looking Ahead
This is unfortunate news for the company, but it sounds like the agreement is still on the cards for FY20. Superloop says they are in discussions with their lenders to ensure that the revised guidance is still within the terms of their existing debt agreements.
Superloop is expected to release full-year results in the week starting 26th August 2019, so more details should be available then.
For now, I’d rather invest in one of the growth companies mentioned in the free report below.
[ls_content_block id=”14947″ para=”paragraphs”]
Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
