Comms Group Ltd (ASX:CCG), a global IT and communications services group, has provided some updated trading commentary as part of its AGM presentation.
Unaudited Q1 FY24 revenue was $13.6m, 50% of our H1 FY24 estimate, and unaudited EBITDA $1.5m, 50% of our H1 FY24 EBITDA estimate, placing RaaS H1 FY24 estimates on track. Large opportunities are expected to close in the Global division over coming quarters, and along with additional Vodafone revenue is expected to boost the H2 FY24 result. The strategic review continues with third-party interest expressed in a number of CCG business units. This comes off the back of recent M&A activity in the sector including the acquisition of (ASX:SYM) by (ASX:ABB) and (ASX:CNW) by (ASX:ATA).
Such activity has boosted the peer EV/EBITDA multiple at a time when CCG has recently underperformed the sector, opening up a relative value opportunity. Applying the average FY23 (profitable) peer EV/EBITDA multiple of 8.5x to CCG FY24 RaaS estimates implies a price of $0.15/share which incorporates continued investment in the Global division. Our DCF is $0.16/share and implies 7.4x FY25 EV/EBITDA, which should be more reflective of the global opportunities.