This report is an updated version of the report published on the 15 March 2024 at 3:30 PM AEDT.

Frontier Digital Ventures Limited (ASX: FDV)

FDV is a Malasia- based company that owns and runs online classifieds marketplaces in underdeveloped and emerging regions. It operates in three main areas: 360 LATAM, MENA Marketplaces Group, and FDV Asia.

Recommendation Rationale – SELL at AUD 0.60

• Financial Performance: FDV’s statutory revenue grew 14.8% YoY in FY23, supported by growth in 360 LATAM by 15%, MENA Marketplaces Group by 7%, and FDV Asia sector by 25%. The group’s statutory EBITDA increased by AUD 8.3mn, driven by restructuring efforts, effective cost management, and revenue growth across various regions.
• Outlook: In FY24, FDV intends to continue expanding revenue by building on the growth momentum from the 2HFY23, with a focus on increasing revenue throughout 360 LATAM, MMG, and FDV Asia. Furthermore, FDV's management is committed to ongoing development and introduction of new classifieds and transactional products and services. This is aimed at sustaining a market position, increasing classifieds revenue, and unlocking transaction revenues in FY24.
• Emerging Risks: Regulatory risk for a media entertainment company refers to the potential negative impact on operations or finances due to changes in laws, regulations, or government policies governing the industry.
• Overvalued Multiples: On a forward 12-month basis, key valuation multiple (EV/Sales, EV/EBITDA, and Price/Cash Flow) is higher than the median of Technology.

FDV Daily Chart

Considering that the stock has surpassed its R2 level, sharp rally in share price movement, current trading levels and risks associated, it is prudent to book profits at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 0.60, at 1:40 PM AEDT as of 15 March 2024.

Note: This report may be updated with details around fundamental and technical analysis, price/ chart in due course, as appropriate.

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 March 15, 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.