Jumbo Interactive Limited
 

JIN Details
 
Significant Growth Achieved in FY19: Jumbo Interactive Limited (ASX: JIN) is engaged in retail of lottery tickets through the internet and mobile devices, sold both in Australia and eligible overseas jurisdictions.

FY19 Performance for the period ended June 2019: Total transaction value in FY19 amounted to $320.7 million, up 75% on prior corresponding period TTV of $183.1 million.Revenue for the year ended 30 June 2019 amounted to $65.2 million, up 64.0% on prior corresponding period revenue of $39.8 million. Net profit before tax amounted to $38.2 million, representing a substantial increase of 123.5% on prior corresponding period value of $17.1 million. Earnings per share for the period amounted to 43.9 cents, up 93.4% on prior corresponding period EPS of 22.7 cents. Ordinary dividend per share stood at 36.5 cents per share, up 97.3% on FY18 DPS of 18.5 cents.


FY19 Results (Source: Company Reports)

Long-term Growth: The company has been growing consistently with 5-year CAGR growth of 21.3% and 43.3% in top-line and bottom-line, respectively, over the period of FY14-FY19. Total transaction value witnessed a 5-year CAGR growth of 24.6%. Since FY15, EBITDA margin for the business has been increasing continuously with FY15 and FY19 EBITDA margins at 28.6% and 61.6%, respectively.

Surge in Customer Engagement: During the year, the company added 444,044 new accounts through a new software platform, increasing 106.6% on prior corresponding period. Active customers at 761,863 increased by 74.1% on pcp. Cost per lead in FY19 went down by 20.1% to $13.81. Average customer spend for the year was reported at $385.44, up 3.9% in comparison to prior corresponding period spend of $371.13.


New Customer Accounts (Source: Company Reports)

Cash Position:As at 30 June 2019, the company depicted a strong cash position of $84.6 million, up from $47.9 million as at 30 June 2018. General funds witnessed a rise of 84.0% to $73.8 million and customer funds increased by 37.5% with a balance of $10.8 million at the end of the period.

Outlook & Strategy: The company witnessed a strong start to July 2019 with total transaction value rising by 60.7% on prior corresponding period.In the month of July, a record Powerball jackpot event with $110.0 million took place.Going forward, the company expects continued growth in TTV from charitable lotteries along with continued revenue growth from SaaS services. The company is targeting ticket sales worth $1 billion on its platform by FY22, including both the reseller business and the SaaS business. Over the period, the company is aiming for two new SaaS deals each year to achieve the said target.

Stock Recommendation:The stock of the company generated returns of 240.96% over a period of 1 year and is currently trading close to its 52-weeks high level of $27.190. During the year ended 30 June 2019, increased customer engagement and more jackpots led to significant growth in total transaction value. In FY19, the company achieved NPBT margin of 58.6% as compared to 43.0% in prior corresponding period. During the year, the company’s strong cash generative operations supported its dividend policy with FY19 payout ratio of 85.7%. Considering the potential of UK market and US online lottery market opening up, the company is aiming at $1 billion in ticket sales by FY22. The investors are advised to wait and watch how the above strategy unfolds and contributes to the company’s growth in the future. Considering the high returns on the stock and the current trading levels, we have a watch stance on the stock at the current market price of $24.090, up 3.391% on 26 September 2019 and suggest investors to wait for a better entry point.


 JIN Daily Technical Chart (Source: Thomson Reuters)

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