Airtasker Limited

ART Details

Change in Director’s Interest: Airtasker Limited (ASX: ART) provides a platform for people to interact and find local services such as furniture repair services, cleaning services and a range of creative tasks like photography blog support etc., in Australia. Recently, the company’s director, James Ronald Travers Spenceley, has undergone a change of interest in the company and has disposed 251,292 ordinary shares at a price of $0.95 per security.

FY21 Financial Performance:

• The company has recorded its revenue of $26.58 million in FY21, up by 38% year on year and exceeded the prospectus forecast of $24.5 million, driven by GMV growth and an increase in the take rate to 17.4%
• ART has reported gross marketplace volume (GMV) of $153.1 million in FY21, an improvement of 35.2% year on year. Additionally, UK GMV is up by 232% YOY due to an increase in unique paying customers.
• Airtasker has reported a decreased net loss by 5.3% to $709 million in FY21, compared to $10.254 million in FY20, enabling eCommerce for existing service industries during the COVID-19 pandemic.
• The company has invested $3.1 million to acquire Zaarly Inc for international strategic growth.
• At the end of 30 June 2021, the company's strong cash position stood at $33.85 million.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks:

• During the COVID-19 pandemic, the effect on activities in the city- and regional-level marketplace and demand squeeze has impacted the company's operations and still, the uncertainty prevails.
• Foreign Currency Risk- The company’s operations are exposed to the global market, due to which the company could face the foreign currency risk.

Outlook:

• The company has planned to invest $20 million to ignite city-level markets in the US and UK for the long term GMV growth opportunity.
• The company is focused on marketing, superstores, and expansion in the international market to accelerate growth in the near-term future.
• The company is intended to invest in the international market with local service industries across Australia, the US and the UK that represent a total addressable market (TAM) of more than $600 billion.
• The management has guided GMV to exceed $200 million and revenue to be over $35 million in FY22.

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 ~3.09% in the past one week and a negative return of ~20.67% in the past three 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, considering ease in lockdown restrictions and a lower debt-to-equity ratio. For the purpose of valuation, peers such as Seek Ltd (ASX: SEK), REA Group Ltd (ASX: REA), Carsales.Com Ltd (ASX: CAR) have been considered. Considering the current trading levels, indicative upside in valuation, strong balance sheet, strategic acquisition, enhancement in international footprint, government subsidy, 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 $0.940, down by ~1.053% as on 13 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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