Temple & Webster Group Ltd

TPW Details

Stock moving up on turnaround strategy:For FY17, Temple & Webster Group Ltd (ASX: TPW) reported revenue of $64.5m (within its guidance of $63.5 - $64.5m) and an EBITDA loss of $6.8m (within its guidance of $6.8m - $7.3m). Net Loss Before Tax reduced to $7.8m from $44.9m in FY16 and 2HFY17 EBITDA loss from Australian operations narrowed to $1.8m, from $7.2m in the prior year corresponding period. The company had a great finish to the 2017 financial year, with the reduction in the Group’s EBITDA loss. As a result, Q4 was the Group’s first cashflow positive quarter and the strongest quarter in its turnaround plan to date. The Group’s revised plan has now been implemented with all sites integrated under the single Temple & Webster brand and website as part of simplification of the go-to-market strategy to grow revenues while gaining operating leverage in gross margins, and variable and fixed operating costs. On the other hand, gross margin % increased to 43.1% up from 40.0% (from Australian operations FY17 vs FY16) while Furniture division continued to outperform by contributing ~60% of sales in FY17 (up from ~52% in FY16).

TPW stock rose 5.13% on September 20, 2017 at the back of the on-going positive momentum while Hingtai Pty Ltd ATF Hingtai Trust became a substantial holder with 6.68% interests. The group has also extended its CEO, Mark Coulter’s, employment contract till August 2018.The stock surged 178.6% in the past three months while it is up 169% in the last one year (as at September 19, 2017) and is trading at higher levels. We give an “Expensive” recommendation on the stock at the current price of $ 0.41

Kogan.com Ltd

KGN Details

Strong growth from Kogan mobile: For FY17, Kogan.com Ltd (ASX: KGN) reported a robust result with 37.1% yoy (year on year) growth in statutory revenue at $289.5 million, while posting Pro Forma EBITDA of $13.2 million (adjusting for one-off transaction costs associated with its Initial Public Offering in July 2016 and unrealized foreign exchange gains and losses). Pro Forma EBITDA was thus up 230.0% on prior year (FY16: $4.0 million) and up 91.3% on Prospectus forecasts, reflecting revenue growth and margin expansion. Further, Pro Forma NPAT of $7.2 million significantly outperformed Prospectus forecasts of $2.5 million. Gross margin was 17.9%, exceeding the Prospectus forecast, driven by precision demand planning to build Private Label inventory, automation initiatives and the accelerated growth of Kogan Mobile. Group’s strong commercial relationship with Vodafone is translating into growth for Mobile segment.


Kogan Mobile Active Customers (Source: Company Reports)
 
During FY18, the company will invest in expanding the Kogan Retail Private Label range, where pre-existing online demand is already established and emerge as a price leader with a strong competitive advantage. Further, partnerships with select brands and distributors via Kogan Marketplace is giving an effective channel to market via a direct voice with the Kogan Community. Moreover, FY18 has started well with 34.9% year on year growth in revenue in July 2017.

KGN stock has moved up 137.7% in the past three months, while it is up 150% in the past one year (as of September 19, 2017).  We give a "Hold" recommendation at the current market price of $ 3.90

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