Megaport (MP1) is a business where all anybody seems to know is in the segment name. They do high speed network interconnectivity.
And demand for their services appears to be growing exponentially. Connecting to Microsoft’s Azure, or Amazon’s AWS infrastructure, or VMware might seem daunting to a small business owner, so you use Megaport as the middle man, who connects you to all those platform SaaS and IaaS functions, for some modestly low, flexibly structured fee.
Revenue’s are great, but 14x revenues…
for negative cashflows always remains a difficult sell, to my mind.
There’s probably too much noise in the sector for our models to work all that well with basic regressions, which robs us of one our preferred valuation frameworks.
Still, it flags WTC and ALU as expensive, which I’ll take via confirmation bias.
It screens as expensive within the sector, as well as against the broader market. Expensive within tech is really saying something.
We are a Quality Growth at a Reasonable Price manager within our direct equity portfolios. This may well be the next 10 bagger (and indeed already has been) but there are simpler, less stressful ways to make money, meet client objectives, and still have good compounders in the portfolio.
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