Why I think this ASX mid-cap stock is a bargain at $5

MotleyFool10-25

The ASX mid-cap stock Tuas Ltd (ASX: TUA) looks excellent value to me at its current share price of just over $5, despite a hefty 150% rise over the past 12 months. Tuas has been one of the strongest...

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Despite the huge gain, I believe that it's undervalued and can climb further in the next year.The company operates as a Singaporean telecommunications business that is challenging the incumbents with a low-cost offering. According to its FY24 result release, the company's average revenue per user  was just $9.68 .For a few reasons, I still think the ASX mid-cap stock is a buy.We don't know how long Tuas will continue growing revenue at its current strong pace, but the telco is showing no sign of stopping.The ASX mid-cap stock also investing in capital expenditure to support subscriber growth and expand its 5G coverage.I'm already a Tuas shareholder due to its Singapore success, but I'm thinking about buying more of the ASX mid-cap stock because o","collect":0,"end_time":0,"defaultTopTitle":"fool.com.au","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK7042":"综合电信业务","XKO.AU":"标普/澳交所 300指数","TUA.AU":"TUAS LTD"},"translate_title":"为什么我认为这只ASX中型股5美元很便宜","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"TUA.AU":1,"XKO.AU":1},"content_text":"The ASX mid-cap stock Tuas Ltd (ASX: TUA) looks excellent value to me at its current share price of just over $5, despite a hefty 150% rise over the past 12 months.\n\nTuas has been one of the strongest-performing S&P/ASX 300 Index (ASX: XKO) shares in the past year. Despite the huge gain, I believe that it's undervalued and can climb further in the next year.\nThe company operates as a Singaporean telecommunications business that is challenging the incumbents with a low-cost offering. According to its FY24 result release, the company's average revenue per user (ARPU) was just $9.68 (3.3% higher than FY23).\nFor a few reasons, I still think the ASX mid-cap stock is a buy.\nStrong revenue growth\nWhen considering businesses that have beaten the market over the long term, I think of companies that have delivered solid revenue growth for a long period of time.\nWe don't know how long Tuas will continue growing revenue at its current strong pace, but the telco is showing no sign of stopping.\nIn FY24, the company's active mobile services increased 28.6% to 1.05 million. Combined with the ARPU growth, Tuas' total revenue rose by 36% to $117.1 million.\nThe telco said part of its growth was being driven by an expanded plan mix that caters to a wide range of customers' needs.\nThe ASX mid-cap stock also investing in capital expenditure to support subscriber growth and expand its 5G coverage.\nTuas is now accepting 10Gbps broadband orders island-wide, serving up to 1.6 million residential homes. At the end of FY24, it had more than 4,000 broadband subscribers, with \"strong consumer interest.\"\nRising profit margins\nWhen looking for market-beating opportunities, I want to see that profit margins will likely increase. Profit growth, rather than revenue growth, typically influences the share price the most. And rising margins can accelerate profit growth.\nFY24 saw operating profit (EBITDA) grow by 60%, compared to 36% growth of revenue. The EBITDA margin rose to 42% during FY24, up from 36% in FY23.\nTelcos are scalable because growth means more subscribers spread the costs across more users.\nIn FY25, the business is targeting full-year positive net profit after tax (NPAT).\nIn the coming years, I believe the EBITDA and NPAT margins can significantly increase.\nExpansion to new markets\nSingapore is a great country to do business in, but there are only so many people in the Asian city-state. It recently reportedly passed the 6 million population mark. A growing population increases the number of potential customers for Tuas.\nHowever, if it successfully expands internationally, the company could become much bigger in the coming years.\nI'm already a Tuas shareholder due to its Singapore success, but I'm thinking about buying more of the ASX mid-cap stock because of its potential to grow in other markets.\nThe Wilson Asset Management investment team recently highlighted some of the countries that Tuas could enter:\n\nTuas is a significant disrupter to the telecommunications market, and we view that recent launch of broadband and enterprise services as increasing Tuas' total addressable market, and in time see its potential entry into Malaysia or Indonesia. \n\nIf it does enter Indonesia, with its population of more than 280 million, it could grow its subscriber base for many years to come.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2478667765"}