Hipages Group Holdings Ltd 

HPG Details

3QFY21 Updates: Hipages Group Holdings Ltd (ASX: HPG) is an online tradie platform and SaaS provider. The company is mainly engaged in connecting tradies with residential and commercial customers through its platform. HPG has reported an increase of 30% YoY in Monthly Recurring Revenue to $4.9mn as of 31 March 2021. Similarly, recurring revenue increased by 23% YoY to $13.5mn for March 2021. HPG has registered an increase of 18% YoY in total revenue in 3QFY21 to $14.3mn. The company has seen growth across other key metrics such as total subscription tradies, which went up by 10% YoY to 29.8k, total tradie Average Revenue Per User (ARPU) of $1,606 was up by 29%. The cash balance increase to $30.4mn as on 31 March 2021 against $29.21mn as on 31 December 2020. 

Notice on Substantial Initial Holder: HPG has informed on 18 May 2021, that Challenger Limited has become an initial substantial holder by holding 5.05% shares in the company.    

1HFY21 Financial Highlights: HPG has registered an increase in total revenue to $26.94mn in 1HFY21 against $22.84mn in 1HFY20. The company has incurred a loss of $5.85mn in 1HFY21. The company has registered a nil non-current borrowing as on 31 December 2020 against $12.11mn as on 30 June 2020.

Revenue trend (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to Covid-19 uncertainties. In addition, the company requires the latest technology to operate its business efficiently. Therefore, obsolete technology may impact the business of the company.  

Outlook:  The company has provided a revised forecast for FY21, with total revenue expected at $55.7mn. The company expects a recurring revenue of $52.6mn in FY21 over $42.2mn in FY20. Subscription tradies expected to increase to 31k in FY21 against 28k in FY20. Total Tradie ARPU is expected at $1,525 in FY21 against $1,194 in FY20.   

Valuation Methodology: EV/EBITDA based Relative Valuation Method (Illustrative)

Source: Analysis by Kalkine Group 

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation: The stock of HPG gave a return of ~37.85% in the last three months and a return of ~22.91% in the last six months. The current market capitalisation of HPG stands at ~$370.58mn as of 28 June 2021. The stock is currently trading close to its 52-weeks’ high price level of ~3.1. On the technical analysis front, the stock has a support level of ~$2.646 and a resistance of ~$3.12. We have valued the stock using the EV/EBITDA multiple-based illustrative relative valuation method and arrived at a target price with a correction of high single-digit (in % terms). We believe that the company can trade at a slight premium as compared to its peer average, considering the company has posted an increase in total revenue in 3QFY21 and an increase in total tradies subscription in 3QFY21. For this purpose, we have taken peers REA Group Ltd (ASX: REA), Seek Ltd (ASX: SEK), Carsales.Com Ltd (ASX: CAR), to name a few. Considering the company has incurred a loss in 1HFY21, decent stock price movement in the past few months, current trading levels, and valuation, we suggest investors to book profits and recommend a “Sell” rating on the stock at the current market price of $3.00, as on Jun 28, 2021, 2:00 PM (GMT+10), Sydney, Eastern Australia.

HPG Daily Technical Chart, Data Source: REFINITIV

iCar Asia Limited 

ICQ Details

YTD April 2021 Witnessing Improving EBITDA Losses: iCar Asia Limited (ASX: ICQ) is engaged in developing and operating internet-based automotive portals in South-East Asia. The company's segments include Malaysia, Indonesia, Thailand and Corporate. ICQ has witnessed a growth in revenue by 37% YoY in April YTD2021 on the back of increasing car demand in Malaysia. As the company has undertaken cost optimisation measures, ICQ has reported a decline in EBITDA losses by 41% in April 2021 YTD. Despite Covid-19 impacts lingering around, Malaysia and Thailand have been profitable during the same period whereas, Indonesia has witnessed a significant decline in a loss in April 2021 YTD.  

FY20 Financial Highlights: ICQ has reported a decline in revenue to $14.05mn in FY20 against $14.84mn in FY19. ICQ has incurred a loss of $10.66mn in FY20. ICQ has seen a decline in its cash balance to $2.16mn as on 31 December 2020 against $6.83mn as on 31 December 2019. The company has undertaken cost-saving measures during FY20, which has resulted in lower advertising & marketing expenses. Due to cost optimisation, the company has witnessed an improvement in EBITDA losses in FY20.

Revenue trend (Source: Analysis by Kalkine Group)

Key Risks: The company is engaged in providing a portal to buy and sell cars. Therefore, an increase in oil prices may impact the demand from car buyers. In addition, the company is may witness supply chain disruptions due to lockdown in some of the global markets.  

Outlook:  The company is focusing on cost optimisation, which has resulted in declining EBITDA losses. ICQ expects to cut down on losses, going further, on the back of cost optimisation measures and expects recovery in the Covid-19 situation. ICQ expects its businesses across all regions to be back on the growth track in the future.    

Valuation Methodology: EV/Sales based Relative Valuation Method (Illustrative) 

Source: Analysis by Kalkine Group 

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation: The stock of ICQ gave a return of ~-8.77% in the last one month and a return of ~-13.33% in the last three months. The current market capitalisation of ICQ stands at ~$121.54mn as of 28 June 2021. The stock is currently trading below the average 52-weeks’ price level range of ~$0.23-~$0.45. We have valued the stock using the EV/Sales multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in % terms). We believe that the company can trade at a slight premium as compared to its peer average, considering the company has registered a decline in advertising and marketing expenses in FY20 and increasing car demand in Malaysia in April 2021 YTD. For this purpose, we have taken peers G.U.D Holdings Limited (ASX: GUD), Hipages Group Holdings Ltd (ASX: HPG), Rent.com.au Ltd (ASX: RNT), to name a few. Considering the company has seen a decline in EBITDA loss in April 2021 YTD, cost optimisation, improvement in performance across all regions in April 2021 YTD, current trading levels, valuation, and key risks associated with the business, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.26, down by ~5.455% as on Jun 28, 2021.

ICQ Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine do not hold interests in any of the securities or other financial products covered on the Kalkine website.