VGI Partners Limited

VGI Details

1HFY21 Key Takeaways: VGI Partners Limited (ASX: VGI) provides investment management services in Australia to VGI Partners Master Fund and VGI Partners Offshore Fund, VGI Partners Asian Investments Limited (VG8), and VGI Partners Global Investments Limited (VG1).

• A Rise in NPAT: VGI posted a higher net profit after tax (NPAT) of $43.03 million in 1HFY21 versus $3.60 million in 1HFY20.
• Growth in Performance Fees: The Group revenue increased to $72.78 million (1HFY20: $13.59 million) due to growth in performance fees (to $50.4 million) and stable management fees ($22.2 million) earned in 1HFY21.
• Interim Dividend: VGI paid 31 cents per share (cps) of interim dividend, fully franked at 30% tax on 10 September 2021 for 1HFY21.
• FUM Growth: VGI held $3.2 billion of FUM as of 30 June 2021 compared to $3.1 billion as of 31 December 2020. The fund performed well across its Asian and global strategies though partially affected by a share market buy-back in VGI Partners Global Investments Limited (VG1) in 1HFY21.
• Liquidity & Debt: The company held $34.6 million cash and cash equivalents and was debt-free on 30 June 2021.
• Fund Performance: VGI Partners Master Fund delivered a net return of +24.7%, and VG1 (Partners Global Investments Limited) gave a net return of +25.6% as of 30 June 2021.

Revenue & NPAT from 1HFY20-1HFY21; (Analysis by Kalkine Group)

Key Risks:

• Financial Risks: VGI faces interest-rate sensitivity, liquidity changes, and credit risk exposure to volatility in the financial markets.
• Regulatory Risks: The company faces increased reporting requirements and financial regulations via regulators and Government policies.

Outlook:

• The company has recruited new strategic hires (CEO) to drive distribution, investor relations, enhance operational and risk management capabilities to serve clients better.
• The current senior investment team will continue to focus on the global and Asian portfolios.

Stock Recommendation: The stock of VGI gave a negative return of 22.89% in the past six months and a negative return of 19.89% in the past nine months. The stock is currently trading towards lower than the 52-weeks’ average price level band of $ 5.800 - $8.770. On a TTM basis, the stock of VGI is trading at an EV/Sales value multiple of 3.9x lower than the industry (Investment Banking & Investment Services) median 5.1x, thus seems undervalued. Considering the current trading levels, revenue & NPAT growth in 1HFY21, fund performance in 1HFY21, and valuation on a TTM basis, and associated risks of regulatory changes, financial markets volatility and prevailing COVID-19 impact, we give a ‘Speculative Buy’ rating on the stock at the current market price of $5.930, down by ~1.167%, as on 15 September 2021.

VGI Daily Technical Chart, Data Source: REFINITIV 

MyDeal.com.au Limited

MYD Details

FY21 Highlights: MyDeal.com.au Limited (ASX: MYD) operates an online retail marketplace, selling the home and lifestyle goods such as homewares and furniture.

• Revenue Growth: The company reported an increase in revenue to $38.3 million, up by 150% YoY with growth in the average order per customer in FY21 and repeat business orders in Q4FY21.
• Increase in Gross Sales: MYD registered higher gross sales of $218.1 million in FY21, depicting an increase of 111% on FY20.
• Rise in Active Customers: The active customer base rose by 83% YoY to a record 894,225 as of 30 June 2021.
• Growth of Private Label Sales: The private label sales contributed $8.8 million of gross sales in FY21 compared to $0.3 million in FY20.
• Liquidity & Debt Status: MYD is well capitalised with $42.7 million cash and holds debt-free status as of 30 June 2021.

Revenue & Net Income from FY17-FY21; (Analysis by Kalkine Group)

Key Risks:

• Technology Risk: The company faces changes in technology and must keep its platform updated to deliver superior performance and create value for its customers.
• Inventory Management Risk: MYD is prone to excess, or shortage of inventory given the disruptions such as COVID-19, macro-economic risks.

Outlook:

• For FY22, MYD will focus on acquiring and retaining customers, expanding its private-label range.
• The firm will promote mobile applications for iOS and Android, broaden the marketing channels and advertising campaigns 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 MYD gave a positive return of 11.45% in the past month and a positive return of 16.80% in the past three months. The stock is currently trading towards its 52-weeks’ average price level band of $0.520 - $2.200. The stock has been valued using an Enterprise Value to Sales based illustrative relative valuation method and have arrived at a target price of low double-digit upside (in % terms). The company might trade some premium than its peers, considering its increase in revenue, active customers, no debt, and higher liquidity position in 1HFY21. For the purpose of valuation, few peers like Temple & Webster Group Limited (ASX: TPW), Redbubble Limited (ASX: RBL), Cettire Limited (ASX: CTT) have been considered. Considering the current trading levels, revenue growth & higher cash receipts in 1HFY21, plans to increase customers and promote mobile apps in FY22, valuation, and associated risks of changes in consumer demand and financial risks, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.730, up by 0.689%, as on 15 September 2021.

MYD 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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