MNF Group (ASX: MNF) H1 FY 2020 Results

MNF Group (ASX: MNF) has today released its first half results for the 2020 financial year, showing profit of $3.7 million for the first half. The company has also downgraded its guidance for full year profit to $10m – $12m, as you can see below.

Previously, it had suggested it would earn more than 30% above that suggesting a range of $13.5m – $15m.

As a result, there’s no reason to view MNF as a growing company at the moment, and its credibility is hurt by yet another miss on guidance. As you can see in the chart below this is not the first time they have missed guidance.

This is made worse by the fact that the company raised capital on the back of bullish guidance. This bullish guidance is not depicted on the graph above as I have updated the second half guidance to be in line with their downgrade today.

In fact, the earnings per share seems to be actually declining after many years of steady gains. At this point, I don’t think that the market will take the company’s forecasts seriously for a while.

I guess my final observation before I sell my shares in MNF Group (ASX: MNF) is that they don’t seem to be talking about their NPAT miss on the conference call. It’s as if they are ignoring the elephant in the room, but there’s clearly a real issue with their ability to forecast earnings. On top of that, their presentation doesn’t include the number of domestic wholesale customers which is a good leading indicator of future growth in that segment

With the coronavirus threatening a global slow-down, I don’t really see much point in holding MNF shares and would value them at around $3.

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