Cettire Limited

CTT Details

Sales Revenue & Margins Growth in 1HFY22 (Ended 31 December 2021): Cettire Limited (ASX: CTT) is an online retailer of in-demand branded personal luxury products such as shoes, bags, apparel, and accessories via cettire.com.  

• Sales revenue increased by ~181% Y-o-Y from ~$40.5 million in 1HFY21 to ~$113.7 million in 1HFY22, backed by a continual focus on implementing its growth strategy.
• The net operating cashflows grew from ~$8.57 million in 1HFY21 to ~$12.29 million in 1HFY22, up by ~43% on pcp.

Trading Update: CTT reported a continued positive trading momentum flowing into 2HFY22 with ~242% Y-o-Y growth in gross revenue in January 2022.

Sales Revenue Growth, Highlights; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of acquiring new customers on the platform, product category expansion, peer competition, and technological changes.

Outlook:

• The personal luxury goods market is anticipated to be a ~$600 billion industry by 2025 on the back of digital channels and expected demographic growth. CTT is investing continuously to penetrate deeper and capture more market share.
• CTT plans to launch mobile apps to maximise the transaction flow further and enhance conversion rates. Besides, CTT intends to launch a beauty category and extend its total addressable market.

Stock Recommendation: The stock of CTT gave a negative return of ~68.74% in the past three months and a negative return of ~67.84% in the past six months. The stock is currently trading near its 52-weeks’ low level of ~$0.995. On a TTM basis, the stock of CTT is trading at an EV/Sales value multiple of ~2.1x lower than the industry (Consumer Cyclicals) average of ~42.0x and (Specialty Retailers) median of ~2.3xthus seems undervalued. Considering the low trading levels, growth in customer units, rise in revenue sales, improved net operating cashflows, valuation on a TTM basis, new product category launch plans, favourable demographics, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $1.000, down by ~6.543% as of 11 April 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

CTT 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.

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