Stocks’ Details

Temple & Webster Group Ltd

Business Scaling Profitably: Temple & Webster Group Ltd (ASX: TPW) is a leading online retailer of furniture and homewares. The company recently updated that SG Hiscock & Company Limited ceased to be a substantial shareholder in the company. According to another update, ICE Investors Pty Ltd became a substantial shareholder of the company with the voting power of 6.6%.

In the recent H2FY19 business update, the company reported an approximate increase of 40% in revenue for the period from 1 January 2019 to 30 April 2019, as compared to the prior corresponding period. As at 30 April 2019, the company reported 36% growth in the active customer in comparison to pcp.

Highlights of H1FY19: During the first half of the year, the company generated revenue amounting to $49.4 million, up 40% YoY. EBITDA for the period stood at $0.9 million as compared to a loss of $0.5 million in the prior corresponding period. H1FY19 period saw a positive cash flow with $11.5 million cash at the end of the period with no reported debt.


Profit & Loss Statement (Source: Company Reports)

Stock Recommendation: The stock of the company generated returns of -7.69% and -4.64% over a period of 1 month and 3 months, respectively. Currently, the stock is trading slightly towards a 52-week higher level of $1.730 with PE multiple of 40.790x. The first half of FY19 was a period of favourable performance with rising revenues, strong balance sheet, positive cash flow position and rapid growth in active customers. In addition, the company had a strong balance sheet and cash flow position for H2FY19, to 30 April 2019. In H1FY19, the company reported a gross margin of 44.6% as compared to the gross margin of 44.2% in the prior corresponding period. Contribution margin for the period was 16.5%, which is higher than the contribution margin of 16.1% in pcp. Hence, considering the above factors and current trading level, we recommend a “Speculative Buy” for the stock at the current market price of $1.410, down 2.083% as on 04 July 2019.
 

Noni B Limited

Continued Investment in Online Presence: Noni B Limited (ASX: NBL) is engaged in retailing of women’s apparel and accessories. In a recent update to the exchange, the company announced that Cadence Asset Management Entities ceased to be a substantial shareholder in the company. In another announcement, the company updated that the voting power of LHC Capital Partners Pty Ltd increased from 12.07% to 13.42%.

Highlights of H1FY19: During the first half of the financial year 2019, the company reported total group revenue amounting to $464.4 million, up 140.4% on the prior corresponding period. The company’s revenue went up following the acquisition of five brands from Speciality Fashion Group in July 2018. Sales through online channels grew by 27.9%, representing 9% of total sales during the period. Underlying EBITDA for the period stood at $29.1 million, up 31.4% on the prior corresponding period EBITDA of $22.1 million. The period saw strong cash flow with cash in hand as at 30 December 2018 at $64.7 million as compared to $34.1 million as at December 2017.


Financial Highlights (Source: Company Reports)

Outlook: The company expects to report EBITDA of $45 million for FY19. In addition, the company expects FY20 EBITDA to exceed $75 million.

Stock Recommendation: The stock of the company generated returns of -3.15% and -3.48% over a period of 1 month and 3 months, respectively. During H1FY19, the company reported robust growth in sales post acquisition of Speciality Fashion Group brands, with continued growth in online sales. In addition, the company has provided an FY19 EBITDA guidance of $45 million, higher than FY18 EBITDA of $37.2 million. As per the management, the company delivered a better-than-expected turnaround during H1FY19 and has considerable opportunities for further growth, capitalising on a robust financial position. Hence, we recommend a “Speculative Buy” on the stock at a current market price of $2.750, down 0.722 as on 04 July 2019.
 

Kogan.com Limited

Strong Growth in Exclusive Brands Revenue: Kogan.com Limited (ASX: KGN) operates in the retail sector through its businesses namely Kogan Retail, Kogan Marketplace, Kogan Mobile, Kogan Internet, Kogan Insurance and Kogan Travel. The company has recently signed an agreement with Splitit Payments Ltd wherein it will provide Splitit’s unique instalment payment solution for online purchases in Australia through Kogan.com website. In a recent announcement, the company updated on the agreement signed with Meridian Energy’s Australian subsidiary, Powershop Australia for offering its power and gas services to Australian households under the brand name Kogan Energy. The brand is expected to launch before the end of the calendar year 2019.

In the March 2019 quarter, the business reported strong earnings growth. As at 31 March 2019, Kogan.com had 1,589,000 active customers as compared to 1,288,000 as at 31 March 2018. Active customer for Kogan Mobile grew by 40.6% YoY, as at 31 March 2019. Kogan Internet grew active customers by 78.7% QoQ, as at 31 March 2019. Gross Transaction Value for the period reported an increase of 17.5% on pcp. Revenue during the quarter increased at a rate of 9.5% on pcp. EBITDA reported a remarkable growth of 96.4% on pcp.

During the half year ended 31 December 2018, the company witnessed strong YoY growth in exclusive brands revenue at 26.1% in comparison to the prior corresponding period.


Upliftment in Brands Revenue (Source: Company Reports)

Outlook: In the second half of the year, the company expects continued brand growth, deeper market penetration in existing portfolio businesses along with the launch of new portfolio businesses. In addition, the company is also expected to launch new verticals and report further growth in active customer base.

Stock Recommendation: The stock of the company generated returns of -8.81% and 22.68% over a period of 1 month and 3 months, respectively. The company reported a strong performance in the March quarter with active customers growing across all the business verticals. As per H1FY19 results, the company has significant plans in pipeline including the launch of new portfolio businesses and addition of new verticals. In addition, the company has also entered into agreements with Splitit and Powershop Australia and we would prefer to wait and watch on how these agreements shape up the business in combination with the future pipeline discussed above. Hence, considering the above factors along with the volatility of returns, we suggest investors to closely watch the stock at a current market price of $4.970 (up 4.412% on 04 July 2019).
 

Kathmandu Holdings Limited

Strong Growth in Oboz Business: Kathmandu Holdings Limited (ASX: KMD) is engaged in design, marketing and retailing of clothing and equipment. The company recently made an announcement for payment of an ordinary dividend of NZD 0.04 per security which was paid on June 21, 2019.

Financial Highlights for Six Months Ended 31 January 2019: The company reported sales amounting to NZ$232.0 million, up 13.3% on the prior corresponding period. Sales from the Oboz business amounted to $29.2 million, up 38.6% on the prior corresponding period. Gross profit for the period increased by 9.4% to NZ$ 141.9 million.Normalised EBIT for the period stood at NZ$19.8 million, up 10% in comparison to pcp. The company reported normalised NPAT amounting to NZ$13.2 million, up 7.3% on pcp.


Group Results Summary (Source: Company Reports)
Outlook: The company remains focused on achieving sales growth in its core Australasian business to fund investment for future growth. The full year results for 2019 are dependent on the key promotions to come.

Stock Recommendation: The stock of the company generated returns of -4.19% and -11.21% over a period of 1 month and 3 months, respectively. The first half of FY19 was characterised by diversification of channel, brand, product and geography and strong growth in Oboz business. In addition, the company witnessed sales growth of 2.7% from Australia, the largest market for Kathmandu. Retail gross margin increased from 63.4% on H1FY18 to 64.2% in H1FY19. During the first half, the company had an EBITDA margin of 12.4%, which is higher than the industry median of 9.0%. Based on the above-stated parameters, we give a “Buy” rating to the stock at the current market price of $2.070, up 0.485% on 04 July 2019.


Comparative Price Chart (Source: Thomson Reuters)   
  

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.