Kogan.com Ltd (ASX: KGN)
KGN Details
Focusing on digital efficiency and customer-centric approach: Kogan, the online retailer with a disruptive technology and sourcing-driven business model, saw a share price plunge of over 2.7% on October 20, 2017 while Industry Super Holdings Pty Ltd lately ceased to be a substantial holder in the group. The group has otherwise beaten prospectus forecast with respect to its FY17 performance. Revenue exceeded FY17 Prospectus forecast by $48.3 million while gross profit was 40.9% above Prospectus forecast at $51.7 million. This drove the year-on-year increase of $9.2 million in Pro Forma EBITDA. Earnings upgrade during the year with 36% rise in active customers to 955,000 over FY16, and growth from Kogan mobile and Kogan insurance have been among the other highlights during the year. The group’s strengths lie in price leadership through digital efficiency and customer-centric approach. Further, Private Label has been a pillar of the business and remains a focus area for FY18 and beyond as it benefits from full control of the end-to-end supply chain, competitive advantage, and consumer offering. The group’s partnership with Vodafone and competitively priced offerings on fixedline NBN network are aimed to boost Kogan nbn prospects.
Active Customers and Net Promoter Score (Source: Company Reports)
The group announced a final dividend of 3.80 cents per share that led the total fully franked dividend in FY17 to 7.70 cents per share. While some risks in the retail sector do prevail given the Amazon entry, we put a “Hold” on the stock at the current price of $4.36
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KGN Daily Chart (Source: Thomson Reuters)
Afterpay Touch Group Ltd (ASX: APT)
APT Details
Tracking for more growth: Afterpay Touch Group, a technology driven payments company, has seen its stock surging about 74% in last three months (as at October 19, 2017) while the group is setting its economies of business and is tracking for more growth. The group is investing strongly in the Afterpay growth agenda while there is a larger cost base as a result of the merger. The group is focusing on extracting merger synergies with addition of resources and infrastructure capabilities. APT’s Q1 FY18 underlying sales of $367m have been up from $271m in Q4 FY17 with 8,600 merchants on-board and over 1.1m customers (up from 841k at 30 June 2017). The group’s progress with regards to emerging partnerships in travel and retail sector, and platform initiatives are expected to enhance profitability profile. The group’s PAY NOW business is also performing as expected. The group has updated that its bulk of losses is associated with first time customers who never pay and have stated to realise business benefits when customers pay in full, on time. The percentage of customers that pay late and pay late fees on all 4 instalment payments relate to less than 0.07% of total orders. Given these limited shortcomings while the stock run-up has been high, we put a “Hold” on the stock at the current price of $5.43
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APT Daily Chart (Source: Thomson Reuters)
NextDC Ltd (ASX: NXT)
NXT Details
Efforts to sustain revenue growth: NextDC’s stock has risen about 31% in last one year, as at October 19, 2017. The group has a long-term prospect at the back of on-going initiatives and developments. NXT’s new Uptime Institute Tier IV Certification for Fault Tolerance and Tier III Gold Certification in Operational Sustainability have demonstrated the highest level of operational excellence and assurance for NXT’s customers. The research and development methodology has led the delivery of Tier IV data centres at capital costs per megawatt that are competitive with Tier III facilities. The group had indicated about their plans with regards to the three new data centres in Brisbane B2, Melbourne M2 and Sydney S2 to receive Uptime Institute Tier IV Certification of Constructed Facility during the financial result announcement for the full-year ended 30 June 2017. NXT has been developing its internal systems and processes in FY17 with the ongoing implementation of online platforms to automate and integrate the management of the entire customer journey through the ‘lifecycle’ of their data centre service with NEXTDC. Further, cloud and mobile computing and growth in internet traffic are set to drive demand for carrier and vendor neutral outsourced data centre services. Given the scenario and group’s expectation to have revenue growth in the foreseeable future, we maintain a “Hold” recommendation on the stock at the current price of $5.01
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NXT Daily Chart (Source: Thomson Reuters)
Class Ltd (ASX: CL1)
CL1 Details
Increase in SMSF market share: Class Ltd, a provider of cloud software for administration of self-managed super funds (SMSFs), has attained the milestone of having 150,000 accounts in the September Shareholder Update, and this is an increase of 56% since IPO in December 2015. The group’s FY17 result entailed a 37% increase in NPAT to $7.9 million while a record 31,503 new accounts were added to the platform. There was a jump in the market share of SMSFs from 19% to 24% and this makes the group become a threat to peers. In fact, market share has increased again to 25% at the end of the September quarter. The group’s ability to demonstrate business model scalability has come from the FY17 EBITDA margin expansion from 45% to 48%. CL1 has also been investing in Class Super and Class Portfolio with additional staff and resources allocated to the development. There has been a 12% growth in Class Portfolio accounts last quarter and 28% of Class Super customers now use Class Portfolio. High retention rate for clients, new accounts and recurring revenue have helped the group increase the market share and develop an edge over competitors. We give a “Hold” on the stock at the current price of $2.92
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CL1 Daily Chart (Source: Thomson Reuters)
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