MySale Group plc (LON:MYSL) pre-close trading update confirms strong full year trading for the group, with improved financial and operational performance delivering growth. Group revenue increased c.6% to A$268m, while higher margin online revenue, representing c.90% of the total group, experienced growth of 10% to A$240m. As a result, gross profit grew 14% to A$76m, underpinned by a 190bp improvement in gross margin to 28.3%. Management remain focused on running efficient and effective marketing strategies, with increased emphasis on customer re-engagement and retention, to continue to improve core KPIs and drive profitable growth. This has helped deliver impressive underlying EBITDA growth of c.58% from A$5.5m to A$8.7m, slightly ahead of our A$8.5m forecast. More detail is expected at the full year results due to be reported towards the end of September.
Management remain confident in outlook, with strong momentum carrying into FY18. The company have provided guidance of revenue growth of 15-20% for the year in line with our 16.0% forecasted, and EBITDA of between A$11.5 – 11.8m (Zeus A$11.5m).
Strategic partnerships and acquisition progressing as planned, driving growth. The strategic partnership with gilt.com, to help scale the group’s retail marketplace platform that was announced in March, has launched and is progressing as planned. The integration of Identity Direct, a leading online retailer of personalised products that was acquired for A$2.7m in April, is progressing well and performing in line with expectations. A new partnership, with a global online retailer, has also started in test phase and will open a strong inventory pipeline and expand product selection.
Overall view. MySale Group Plc 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. MySale is a business that generates substantial revenues that are currently valued on an EV/Sales multiple of just 1.0x. The e-commerce peer group trades on an average FY1 EV/Sales multiple of 2.1x. If MySale traded on 1.5x it would equate to 178p.
