MySale Group plc (LON:MYSL) the leading international online retailer, has today announced its unaudited interim results for the six months to 31 December 2016. Zeus Capital released the following note:
Today’s interim results confirm strong first half trading for MySale, with improved financial and operational performance delivering growth. Group revenue increased 7% to A$136.7m, while higher margin online revenue, now representing c.93% of the total group, experienced a strong rate of growth of 19% to A$127.1m. Gross profit grew 17% to A$38.4m, underpinned by a 260bp improvement in gross margin to 28.1%. Management remain focussed on efficient and effective marketing strategies, with increased emphasis on customer re-engagement and retention, to continue to improve KPIs and drive profitable growth. This has helped deliver impressive underlying EBITDA growth of 68% YoY from A$1.8m to A$3.0m. Underlying PBT also improved to A$0.6m versus a loss of A$0.2m in H1 16. Management remain confident going into the second half of the year, and following the increase in guidance at the end of November, the company remains comfortable with current full year forecasts.
* Business remains on course to achieve full year EBITDA expectations of A$8.5m. As expected, profitability will be skewed one third/two thirds between H1 and H2, with room for continued market improvement in H2 driven by the core ANZ region as well as the more mature territories in South-East Asia, which delivered 12% growth in H1 17.
* Improving KPIs and focussed marketing strategy is delivering results. Following sizeable increases in prior year, average order value increased by 3% to A$86 (H1 16: A$84) and average revenue per active customer was held stable at A$295 (H1 16: A$294), while the active customer base increased significantly by 19% to 870k (H1 16 731k). The returns rate remains low at c.5%, while mobile represents 58% of orders.
* Planned strategic initiatives to deliver improved financial performance now in place to support long term growth plans. At the interim stage last year, MySale published a business plan identifying ways to achieve three key strategic aims, namely 1) drive increased activity levels with existing customers, 2) grow active customer base, and, 3) improve gross margins. The business continues to deliver against these, especially in the key ANZ region.
* Overall view. MySale continues to deliver against the management plan with improved operational and financial performance, and it is particularly encouraging to see continued growth coupled with a significant improvement in the margin. It remains our view that there is also possible upside to come from new income streams, including the budding retail marketplace. The shares have performed well over the past 3 months (c.+25%), however we still see potential for a significant increase in valuation. MySale is a business that generates substantial revenues that are currently valued on an EV/Sales multiple of just 0.9x. The e-commerce peer group trades on an average FY1 EV/Sales multiple of 1.9x. If MySale traded on 1.5x it would equate to 187p.
Carl Jackson, MySale Group plc Chief Executive Officer, commented “We are pleased with the strong start we have made to the year. Financially we have performed well and strategically have made good progress towards our goals. The number of active customers, online revenue and gross profit each increased substantially as our compelling consumer proposition resonated with our customers around the world.
In ANZ we have continued to shift the emphasis of our marketing towards re-engagement and retention, with encouraging early improvements in marketing efficiency, and have also seen good progress in the development of our retail marketplace platform.We carry good momentum into the, historically stronger, second half of the year and have a number of exciting initiatives which will support our future growth. The growth of our underlying EBITDA for four consecutive half year periods endorses our strategic plan and we remain confident in the full year’s prospects.”
