These ASX shares are exciting options because of their long-term growth potential.
I think the best businesses to own for the long term are ones that can scale up significantly. Investors can benefit from the growth journey as they expand their operations and increase their profits.
I’m on the lookout for businesses that the market isn’t fully appreciating yet. That’s why I’d be very happy to buy shares of the following companies.
Tuas Ltd (ASX: TUA)
Tuas is a Singapore telecommunications business which provides mobile services. Tuas claims that it’s offering 5G services at 4G prices for subscribers which it says reinforces its leadership as the best value mobile services provider in Singapore. It also has a fixed broadband offering.
The company is seeing a rapid increase in active mobile services. At the end of the FY24 first half, its subscribers had reached 938,000 – up 14.5% over six months and up 37.5% over 12 months. This helped revenue increase 38% year on year to $54.7 million.
One of the most attractive things about the ASX share is its clear ability to increase its profit margins as it gets larger. In HY24, the EBITDA margin increased to 41% compared to 36% in HY23. This helped total EBITDA grow 56% to $22.4 million.
I have hopes that its EBITDA margin (and other margins) can keep increasing as the business keeps getting bigger.
Since the production of this article, the company released a strong FY24 result.
Siteminder Ltd (ASX: SDR)
Siteminder provides software to hotels to help them unlock their revenue potential. It also has an ‘all-in-one’ hotel management software offering. With offices in Sydney, Bangalore, Bangkok, Barcelona, Berlin, Dallas, Galway, London and Manila, it’s a global business.
The ASX share is involved in more than 120 million reservations worth over A$75 billion each year.
Siteminder is rapidly becoming bigger, with total revenue growth of 26% in FY24 to $190.7 million. Within that, subscription revenue grew 16.2% following a 13.8% increase in subscription properties to 44,500. Transaction revenue rose 30%.
The company reported FY24 annualised recurring revenue (ARR) increased 20.8% to $209 million, which implies at least 9.6% revenue growth before winning any new customers during FY25.
Siteminder’s underlying EBITDA turned positive in FY24, with an improvement of $22.8 million to $0.9 million, thanks to the “benefits of operating leverage and cost discipline”.
If Siteminder keeps winning new hotels as subscribers, as it has done, then I think the future looks very bright for the software ASX share.
