In today’s daily we have covered stock research on ENSOGO (BUY).
The S&P 500 was up by 25.05 points or 1.20% to 2105.20 on Wednesday. U.S. stocks jumped on Wednesday, helped by optimism that Greece may be closer to reaching a deal with creditors and by gains in technology and financial shares. All 10 major S&P 500 sectors ended higher, with the technology index up 1.6 percent and leading the gainers. The S&P financial index, which has risen with the prospect of higher rates, climbed 1.4 percent and turned positive for the year.
Netflix was up 3.7 percent at $671.10 and hit a record intraday high of $692.79, a day after shareholders approved a massive increase in the number of shares the company is authorized to issue, the first step toward a possible stock split. The Dow Jones industrial average rose 236.36 points, or 1.33 percent, to 18,000.4, the S&P 500 gained 25.05 points, or 1.2 percent, to 2,105.2 and the Nasdaq Composite added 62.82 points, or 1.25 percent, to 5,076.69. HCC Insurance Holdings shares rose 36.4 percent to $77.35 after Tokio Marine Holdings said it had agreed to buy U.S. specialty insurer for $7.5 billion.
NETFLIX Daily Chart (Source - Thomson Reuters)
S&P ASX 200 was up by 7.30 points or 0.13% on Wednesday and closed at 5478.60 points.Commonwealth Bank was up 0.1 per cent to $79.91, Westpac gaining 0.03 per cent to $31.36, andNational Australia Bank added 0.7 per cent to $31.83. ANZ was the only bank to fall into the red again, down 0.2 per cent to $31.09. Telstra was the biggest drag on the main index, shedding 1 per cent to fall back below $6, at $5.96. Of the sectors, energy was the winner, up 1.45 per cent, followed by consumer staples which was 0.7 per cent higher. Telecommunications fell 0.9 per cent, health was down 0.8 per cent and consumer discretionary fell 0.4 per cent.
Rio Tinto was down 0.5 per cent to $56.07, but BHP Billiton rose $27.66. Fortescue fell 2.5 per cent to $2.33 but Newcrest gained 0.8 per cent to $13.55 as the gold price edged higher.Economists at China's central bank have lowered their 2015 growth forecast for the Chinese economy to 7.0 per cent, from 7.1 per cent, citing increased downward pressure on activity. ANZ chief executive Mike Smith says there is potential for a housing bubble to form, and has backed a discussion on negative gearing as part of a broader review of the tax system. Nine Entertainmenthas denied any wrongdoing on its part or by chief executive David Gyngell over the sale of more than $1.5 million worth of shares in the weeks preceding Nine's profit downgrade.
TELSTRA Daily Chart (Source - Thomson Reuters)
Top Performers ASX 200 :-
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Stock Of The Day - Ensogo (BUY)
Ensogo Ltd (ASX:E88) earlier known as iBuy Group Ltd, reported a cash collections of $23.1 million in the first quarter of 2015, delivering an increase of over 23% as compared to the same period in 2014. The firm’s net cash rose by $1.7 million to $7.5 million during the first quarter of 2015.
The company managed to deliver a strong quarter growth, in spite of the Chine New Year in February which causes seasonality impact. Ensogo managed to balance the slowest trading period by cutting down the marketing expenses and implementing Ensogo Edge, the firm’s proprietary technology firm. Ensogo leveraged its partnership with VIPShop and managed to raise huge capital this year to target the tremendous e-commerce opportunity in the region. The company raised an amount of over $48 million funds from institutional investors during this year.
Ensogo’s timeline since IPO (Source: Company Reports)
Strategic Partnership with VipShop
Vipshop Holdings Ltd (NYSE:VIPS), a Chinese based online discount retailer invested $6.4 million in Ensogo during February 2015. VipShop got over 12.2% of stake for 10.8 cents of Ensogo shares. By investing in Ensogo, VipShop entered into South East Asia market. The director of corporate development of VipShop, David Gu joined in Ensogo board as director.
With regards to the strategic partnership, Ensogo got access to the Vipshop’s huge inventory (Around USD 5 billion of moving inventory in Vipshop’s warehouses as of 2014). Ensogo also got access to over 7000+ suppliers and 13,000 brands through VipShop. Both the firms have tested their logistics flow. Vipshop picks and packs the orders of customers who purchase on Ensogo websites. Ensogo will pick up the packed products from Vipshop and deliver them to customers in over four to six days. Ensogo estimates to gain from this partnership from the second half of the year.
During March 2015, the firm raised over $10 million from WF Asian Reconnaissance Fund by issuing 58.8 million new Ensogo shares at $0.17 per share.
The firm’s conditional placement of 189 million fully paid shares to raise an amount of $35 million was oversubscribed last month, boosted by Asian and Australian investors. The firm issued at a price of $0.185 cents per share. Moreover, Ensogo’s strategic investor VipShop agreed to exercise its anti-dilution right with regards to this raising, and invested a further amount of $3.1 million at the same issue price of $0.185 per share. VipShop agreed to maintain its stake of 10% in the company. Ensogo intends to use these funds for activities like marketing programs and working capital in the coming two years, to raise its unique buyer base. The firm will use $29 million for marketing programs related to customer acquisition and retion and $7 million for further working capital costs. The company is allocating around $2 million for capital expenditure related expenses, used for developing the ongoing technology platforms. Ensogo believes that the raised capital offers them a strong platform to achieive its strategy of becoming the Number 1 flash sales business in South East Asia.
Delivering Growth
Ensogo started with Hong Kong, Singapore and Malaysia markets. The firm rebranded from iBuy to Ensogo during the fourth quarter of 2014, and changed the ticker to E88. The firm has a $75.5 million gross turnover for 2013 and went to public offering in December 2013. Ensogo acquired LivingSocial SEA for $20.2 million in April 2014 to enter into the Thailand, Philippines and Indonesia markets. Consequently, the firm improved its pro forma gross turnover by 73% to $130.6 million in FY 13, as compared to the same period’s gross turnover. The firm’s Pro Forma FY2013 revenue also rose to $49.4 million from $13.3 million. The acquisition added over 4.3 million subscribers to the firm’s customers base.
Livingsocial sea Acquisition (Source: Company Reports)
As per the fiscal year 2014 growth, Ensogo’s gross turnover rose by 101.7% in year over year (YOY) terms to $152.3 million, as the total orders improved by 89%. Ensogo’s subscriber’s base surged 186.3% YOY to 8,469,000, and managed to grow its repeat customers base by 198% to 584,000 .
2013 vs 2014 growth (Source: Company Reports)
Going forward, Ensogo wants to be the leading South East Asia’s online discount retailer for brands. Accordingly, the company is focusing on customer experience, customer acquisition as well as smooth logistics. Ensogo intends to enter into new markets in 2016.
Potential growth (Source: Company Reports)
Huge E-commerce Growth potential
The number of internet users in Ensogo’s six core markets is forecasted to increase to 300 million by 2019 from over 168 million in 2014. Moreover, just 1% of retailers shop online in South east Asia, as compared to 10.5% in China as of 2014.
South East Asia E-commerce opportunity (Source: Company reports)
Conclusion
Ensogo’s strong quarter results as well as capital raising activities have been welcomed by stock markets, with the stock delivering a whopping year to date returns of 91.36%. The stock rallied over 24% in the last three months and around 47.6% in the last six months. We believe that Ensogo has the potential to target the tremendous e-commerce opportunity in South East Asia. The company also expects to derive benefits from its Vipshop partnership by the second half of this year. Moreover, as the company is using its raised capital for boosting its customer base, the firm’s gross turnover will eventually improve. With the stock correcting over 20.5% in the last four weeks, we believe that Ensogo is at attractive levels to invest.
E88 Daily Chart (Source - Thomson Reuters)
Based on the foregoing, we recommend a “BUY” rating at the current price of $0.15.
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