small-cap

One Consumer Discretionary Stock Trading Near Resistance Levels – CTT

Nov 14, 2024 | Team Kalkine
One Consumer Discretionary Stock Trading Near Resistance Levels – CTT
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CTT:ASX
Investment Type
Small-Cap
Risk Level
Action
Rec. Price (AU$)

This report is an updated version of the report published on 14 November 2024 at 2:01 PM AEDT.

Cettire Limited (ASX: CTT) 

Cettire Limited (ASX: CTT) is a global luxury online platform. Through its website, cettire.com, the company provides access to over 2,500 prestigious brands and more than 500,000 products, including clothing, shoes, bags, and accessories. Its technological advancements in FY24 expanded the company’s global reach, delivering automated end-to-end service to more markets and enhancing the customer experience.

Recommendation Rationale – SELL at AUD 1.640

  • Trading Around Resistance: CTT’s share price has crossed its R1 level and approaches R2 level, recommended on 8 November 2024.
  • Overvalued Multiples: On a forward 12-month basis, the stock is trading at an EV/EBITDA multiple of 12.8x vs industry (Specialty Retailers) median of 5.8x
  • Decline in Profits: In FY24 (for the year ending 30 June 2024), Net Profit After Tax was $10.5 million, down from $15.9 million in FY23.
  • Emerging Risks: Any disruption due to system failures, cyberattacks, or data breaches could damage the company’s reputation, harm customer trust, and result in financial losses. The online luxury retail space is highly competitive, with shifts in consumer preferences or pricing strategies potentially challenging the company’s market position.

CTT Daily Chart

 

Valuation Methodology: P/E Approach (FY June'25E) (Illustrative)

Stock might trade at some premium to its peers, considering the company's zero financial debt, positive FY25 outlook, expanding international footprint, growing customer base, progress in operational optimisation, cost reduction efforts, among other factors. For valuation, a few peers like Temple & Webster Group Ltd (ASX: TPW), Kogan.com Ltd (ASX: KGN), Lovisa Holdings Ltd (ASX: LOV), and others have been considered. Considering that the stock has crossed its R1 level and approaching R2 level, share price movement, other risks associated with the business, and downside indicated by the valuation, it is prudent to book at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 1.64, at 10:00 AM, as of 14 November 2024.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 14 November 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which 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 at which 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: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.


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Past performance is not a reliable indicator of future performance.