Tuas Ltd. Reports Strong Growth Amidst Challenges

The recent earnings call for Tuas Ltd. painted a picture of robust growth and strategic advancement, tempered by some challenges. The overall sentiment was positive, with significant revenue and subscriber growth, alongside improvements in profitability. However, there were concerns regarding declining gross margins, slower broadband subscriber growth in the latter half of the year, and challenges with Average Revenue Per User (ARPU). Significant Revenue Growth Tuas Ltd. reported a remarkable 29% increase in revenue for FY ’25, reaching $151.3 million, up from $117.1 million in the previous fiscal year. This substantial growth underscores the company’s strong market presence and effective strategies in expanding its revenue streams. EBITDA and Profit Milestones The company achieved significant milestones in profitability, with EBITDA rising by 8% to $68.4 million. Additionally, Tuas Ltd. turned around its net profit after tax to $6.9 million, a notable improvement from the previous year’s loss of $4.4 million, highlighting effective cost management and operational efficiency. Subscriber Base Expansion Tuas Ltd. saw impressive growth in its subscriber base, with mobile subscribers increasing by 19% to approximately 1.254 million. Broadband subscribers also grew, adding 22,000 to reach a total of 25,600, reflecting the company’s successful customer acquisition strategies. Positive Cash Flow The company generated $81.2 million in net cash from operating activities, ending the year with a cash balance of $80.7 million after significant capital expenditures. This strong cash flow position supports Tuas Ltd.’s ongoing investments and strategic initiatives. Strategic Acquisition of M1 Limited Tuas Ltd. announced a strategic move to acquire M1 Limited for SGD 1.43 billion. This acquisition is expected to enhance the company’s market position and create synergies, funded through a mix of cash reserves, equity, and debt financing. Gross Margin Decline Despite the positive financial results, Tuas Ltd. faced a decline in gross margins in the second half of the year. This raises concerns about cost control and the need for strategic adjustments to maintain profitability. Decline in Broadband Subscriber Growth Rate The growth rate of broadband subscribers slowed in the second half compared to the first half of the year, indicating potential market saturation or increased competition in this segment. ARPU Challenges Tuas Ltd. experienced a decline in ARPU during the second half, despite offering a strong value proposition. This suggests pricing and competitive pressures that the company needs to address to maintain revenue growth. Forward-Looking Guidance Looking ahead, Tuas Ltd. provided optimistic guidance for FY 2025, emphasizing continued financial improvements and strategic initiatives. The company projects a standalone CapEx of SGD 50-55 million, focusing on margin optimization and disciplined cash management. Tuas Ltd. aims to further grow its mobile and broadband segments, leveraging the strategic acquisition of M1 Limited. In summary, Tuas Ltd.’s earnings call reflected a positive outlook with significant growth in revenue and subscribers, alongside strategic advancements such as the acquisition of M1 Limited. However, challenges in gross margins, broadband growth, and ARPU present areas for strategic focus. The company’s forward-looking guidance indicates a commitment to sustaining growth and profitability in the coming fiscal year.