Six Online Businesses to have a look at

 
Seek Ltd


SEK Details

Witnessed revenue growth:Seek Ltd (ASX: SEK) reported an underlying NPAT of A$198.1 million in FY 16 exceeding the NPAT guidance. The small decline in NPAT growth is due to the SEEK Learning and investment in early stage ventures. As a result, SEK stock fell over 6.5% in the last four weeks (as of November 11, 2016).
 

FY 16 Financial Performance (Source: Company Reports)
 
On the brighter side, SEK’s revenue grew 11% to A$950.4 million and 5% growth in EBITDA. The revenue growth is at the highest levels in the five years despite the subdued macro conditions as majority of the revenue came from the increase in yield, new products and product and service enhancements. Moreover, SEK expects the continued reinvestment to support their new product and services which would be launched in FY 17. The group will conduct its AGM on November 24, 2016. We give a “Hold” recommendation on the stock at the current price of $14.27
 

SEK Daily Chart (Source: Thomson Reuters)
 
REA Group Ltd


REA Details

Expanded penetration with iProperty group and Flatmates acquisitions:REA Group Ltd (ASX: REA) announced that its Q1 FY17 results was strong driven by iProperty revenue while Australia witnessed softer market conditions. Higher level of marketing expenditure and consolidation of iProperty results led to higher operating expenses. REA earlier reported a 20% increase in revenue to $630 million and a 16% increase in NPAT to $215 million in FY 16 as compared to FY 15. The group EBITDA grew 22% to $347.3m, due to significant increase in Project Profiles and Advertising and strong take up of premium listing products.
 

Q1 FY 17 Financial Performance (Source: Company Reports)
 
Moreover, the website realestate.com.au is number one, while the group expanded their penetration with iProperty group and Flatmates acquisitions. REA witnessed 81% app visits growth on year on year (yoy) basis. REA stock is also available at attractive levels as the stock fell over 11.3% in the last three months (as of November 11, 2016) due to concerns over the property sector. We reiterate our “Hold” recommendation on the stock at the current price of $51.81
 

REA Daily Chart (Source: Thomson Reuters)
 
Carsales.Com Ltd


CAR Details

Volume reductions forFinancial and Related Services segment: Carsales.Com Ltd (ASX: CAR) has reported a growth of 10% in operating revenue to $344.0 million for the FY 16 as compared to FY15 while the adjusted net profit grew 9% to $110.5 million. Moreover, CAR’s dealer revenue increased by 10% year on year. The private seller revenue grew by 19% and the display revenue grew 9% year on year. The Finance and related services showed strong growth with gross profit up 29% year on year. Brazilian and South Korean international investments reported a strong local currency revenue growth. Additionally, CAR had acquired 83% of Chileautos in Chile during the second half of FY 16 and had acquired 65% of SoloAutos during the first half of FY 16. In addition, the Domestic core business performance in the first month of FY17 was strong. CAR is expecting FY17 revenue and EBITDA growth to remain strong due to stable market conditions.
 

FY 16 Financial Performance (Source: Company Reports)
 
Internationally, CAR is expecting no further deterioration in market conditions and the trial of the lead model into Brazil to be a good growth contributor to local currency revenue and earnings in FY 17. On the other side, the Financial and Related Services segment has experienced the volume capacity reductions in Q4 FY16 and this continued into the first quarter of FY17. Therefore, it is anticipated that the first half revenue and EBITDA for this segment will be substantially below FY16 as a result. CAR stock fell 17.5% in the last four weeks (as of November 11, 2016) and still trading at a high P/E. Accordingly, we give an “Expensive” recommendation on the stock at the current price of $9.95
 

CAR Daily Chart (Source: Thomson Reuters)
 
Surfstitch Group Ltd


SRF Details

Undergoing strategic review:Surfstitch Group Ltd (ASX: SRF) in the stage 2 of the strategic review, has engaged 333 capital to advise the company on its strategic options. Moreover, Mike Sonand is appointed as the new CEO of the group. The group also expressed their ongoing focus on cost reduction efforts. SRF as part of stage 2 of the strategic review has received a number of unsolicited, non-binding and indicative proposals. Among them is one in which SRF has received a non-binding indicative proposal for 100% of the shares of SRF from Coastalwatch Pty Ltd (CW), which the company is not considering. In addition, CW is one of the principal claimants in the continuing litigation which SRF is currently defending with regard to the contracts entered. On the other side, SRF reported an 18% growth in the underlying revenue to $235.6 million in FY 16 but underlying profit before tax decreased to a loss of $18.9 million. The FY 16 performance was impacted due to slower than anticipated integration of the entities acquired over the 18 months. Hence, SRF stock fell 90.0% in this year to date (as of November 11, 2016). We believe the group’s strategic review would enhance the position while the stock rose 8.6% in last one month (as at November 11, 2016). We give a “Hold” recommendation on the stock at the current price of $0.195
 

SRF Daily Chart (Source: Thomson Reuters)
 
Webjet Limited


WEB Details

Sale of Zuji businesses:Webjet Limited (ASX: WEB) recently announced about signing an agreement to sell the Zuji businesses in Hong Kong and Singapore to Reckon Holdings Limited and Sharp Focus Pacific Limited, which are subsidiaries of Uriel Aviation Holding Limited. The value entails Webjet receiving total consideration of $56 million, representing a $26 million gain over the purchase price of $30 million. Completion of the sale is expected to occur by February 2017. Earlier, WEB signed a strategic sourcing partnership with Thomas Cook which would see Webjet’s European online accommodation business servicing the wholesale market and taking the responsibility for the majority of the volume of Thomas Cook’s complementary hotel business. The group lately also announced EBITDA guidance for FY 2017 of $78 million while the trading performance in FY17 seems to witness strong bookings growth. The group will hold its AGM on November 23, 2016. Recently, the group with Microsoft built a blockchain proof-of-concept solution for managing activities such as online payments for hotel bookings. WEB stock rose over 79.81% in six months (as of November 11, 2016), placing the stock at higher valuations while domestic travel sector headwinds also prevail. We give an “Expensive” recommendation on the stock at the current price of $10.05
 

WEB Daily Chart (Source: Thomson Reuters)
 
Temple & Webster Group Ltd


TPW Details

Decreasing net revenue per customer remains a concern: Temple & Webster Group Ltd (ASX: TPW) in the 1Q FY 17 reported over 4% growth in the revenue to $16.5 million and a 10% improvement in margin (year on year) due to the margin enhancement initiatives. TPW is on track with the revised business plan to deliver the double-digit revenue growth this year, and reach profitability during CY18. Moreover, TPW has paid the final consideration payment to Wayfair (US) of $2m relating to the Wayfair Australia acquisition in FY16. Additionally, TPW has appointed the current Interim CEO, Mark Coulter, as CEO, and the current interim CFO, Mark Tayler, as CFO.
 

Active Customers and Net Revenue per Active Customer (Source: Company Reports)
 
Despite these efforts, concerns regarding group’s lower net revenue per customer, active customers’ growth and first time customers prevail. Accordingly, we give an “Expensive” recommendation on the stock at the current price of $0.145
 

TPW Daily Chart (Source: Thomson Reuters)

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