BigAir Group (BGL) has succumbed to the high hurdle of expectation with its record result and upbeat outlook failing to impress investors.
The wireless internet services provider posted a 31% surge in revenue to $29.9 million for the year ended June 30 as underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased 24% to $12.1 million.
Management is also upbeat about 2013-14 and pointed out that its EBITDA run rate came in at $14 million on an annualised basis in the months of May and June 2013.
However, its 2012-13 revenue was under consensus estimates of $33.8 million while EBITDA was largely inline with expectations.
The EBITDA run rate is also underwhelming given that analysts have pencilled in EBITDA of $17.2 million for the current financial year.
BigAir’s 59% surge over the past 12-months also gave investors an excuse to lock in profits with the stock dipping 0.5 cents to 68.5 cents.
However, the group has delivered five consecutive years of revenue and EBITDA growth and this growth is expected to continue due to favourable conditions for community broadband (wireless broadband services aimed at international student accommodations) with the fall in the Australian dollar tipped to bolster the number of offshore university applicants.
BigAir is also looking at acquisitions and entry into the retirement village market to drive growth in this business unit.
Management added that its other business, which offers fixed wireless services for businesses, could benefit from changes to the National Broadband Network rollout.
On the downside, margins are likely to contract as earnings before interest and tax (EBIT) margins on community broadband are skinnier than business wireless, and the former is where most of the growth is coming from.
BigAir is part of the Uncapped 100.