Airtasker Limited

ART Details

FY21 Financial Performance: Airtasker Limited (ASX: ART) provides a platform that connects people to outsource tasks, find local services and engages in promotional activity in Australia.

• Strong Revenue Growth- The company has recorded strong revenue growth of 38% year-over-year to $26.57 million in FY21. Despite the lockdown in the market, the revenue exceeded the prospectus forecast of $24.5 million, driven by strong GMV growth.
• Improved GMV performance- The company has delivered an improved gross marketplace (GMV) of $153.1 million, up by 35.2% year-on-year basis.
• Increased loss in Statutory EBITDA performance- The company has delivered a loss in statutory EBITDA of $7.41 million in FY21 against a loss of $6.03 million in FY20. An increase in sales, marketing expenses and administration expenses impacted the EBITDA results.
• Decline in Bottom line Growth- ART has reported a decline of 5.3% to $9.70 million on a year-on-year basis, a subsequent impact on earnings due to the COVID-19 pandemic.
• Liquidity Position- At the end of the period, the company cash position stood at $33.85 million as of 30 June 2021 vs $12.59 million as of 30 June 2020.

Total Revenue (Source: Analysis by Kalkine Group)

Key Risks:

• Impact of Covid-19 pandemic- During the COVID-19 pandemic, the effect on city- and regional-level marketplace activities and demand squeeze could impact the company's operations in the future.
• Stiff Competition- The company is exposed to intense competition in the market, which is vulnerable to opportunity cost risk.

Outlook:

• The company is expanding its footprint in the US and the UK. Further, with the collaboration of Zaarly, it is progressing to launch in Kansas City, Dallas, and Miami in H1FY22.
• The restriction is slowly easing down in domestic and international markets, due to which the company expects growth in key performance metrics in the near-term.
• The company focuses on acquiring assets and investing in the international market to accelerate growth, representing a total addressable market (TAM) of more than $600 billion.
• The management targeted an international GMV run rate (ARR) of $8-10 million in June 2022.
  

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (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 ART is trading below its average 52-weeks' levels of $0.880-$1.965. The stock of ART gave a negative return of ~2.49% in the past one week and a negative return of ~15.58% in the past six months. The stock has been valued using EV/Sales multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight premium to its peers' average EV/Sales multiple, considering the robust revenue growth and a higher asset turnover ratio. For the purpose of valuation, peers such as Seek Ltd (ASX: SEK), REA Group Ltd (ASX: REA), Carsales.Com Ltd (ASX: CAR) and others have been considered. Considering the current trading levels, indicative upside in valuation, decent balance sheet, strategic acquisitions of assets, enhancing its geographical footprint, optimistic outlook, and the key risks associated with the business, we recommend a 'Speculative Buy' rating on the stock at the current market price of $0.970, down by ~2.021% as on 30 September 2021.

ART Daily Technical Chart, Data Source: REFINITIV

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

Note 2: Investment decisions 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 analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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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