MySale “now operates a much more resilient, well invested and agile platform model” says Zeus Capital

MySale Group plc (LON:MYSL) has announced results for FY20A, a year of significant transformation for the Group with the business restructured, recapitalised and repositioned for sustainable and profitable growth. MySale is now a well invested, inventory light e-commerce platform, backed by a solid balance sheet with no debt and cash of A$15.9m at 31 October. We see potential for significant operational gearing to be realised as the business begins to re-scale its international partnerships and build out a new stock model focused on shallow buys using a test and repeat strategy, evidenced by profitable and cash generative trading delivered in Q4 FY20 and the first quarter of FY21E.

  • FY20A results: Revenue of A$131.0m fell 37.2% YOY (FY19A: A$208.6m) as the Group focused on returning to profitability. Gross margin expanded +840ps to 33.5% reflecting improved product mix and lower levels of margin dilution from aged inventory clearance. Significant operating cost savings were delivered, down 47.4% YOY with EBITDA loss of A$2.7m, ahead of management plan.
  • Momentum building: The Group exited FY20A with strong trading momentum, operating on a profitable, cash generative and debt free basis with further improvement to gross, delivered and contribution margins delivered in Q1 FY21. The Group’s proposition continues to attract increasing levels of interest from international brand partners, and we believe the recent share subscription from the ex-Catch.com.au founders and CEO is a clear endorsement of the perceived potential for the Group’s restructured and rightsized platform offer.
  • Outlook: We see several tailwinds to support MySale’s performance over FY21E, including a glut of excess inventory resulting from the severe disruption to retail caused by COVID-19, a likely shift to value-driven retail resulting from ongoing economic uncertainty and the acceleration of e-commerce growth in ANZ which is a relatively immature market for online retail (c.17% penetration versus c.30% for UK). MySale now operates a much more resilient, well invested and agile platform model with A$15.9m in net cash at 31 October, following the most recent round of investment.
  • Forecasts: We have taken a conservative approach to our forecasts for the year ahead given ongoing heightened uncertainty and a lack of visibility over near term trading, but note the solid momentum seen YTD with the Group trading profitably and cash generatively through Q4 FY20A and in the first four months of FY21E, with margins continuing to expand.
  • Valuation: MySale Group’s restructured platform offer has the potential to scale quickly and profitably. Our medium-term intrinsic valuation analysis illustrates the potential for MySale to be a A$15m-A$20m EBITDA business on a 3-5-year view. Applying the average peer group FY3 EV/EBITDA multiple of 18.5x suggests an enterprise value of £153m – £204m, 62%-117% upside to current levels.
Click to view all articles for the EPIC: ,
Or click to view the full company profile:
    Facebook
    Twitter
    LinkedIn
    MySale Group Plc

    More articles like this

    Fintel plc

    Fintel core revenue growth is higher than Zeus forecast

    Fintel plc (LON:FNTL), the leading provider of Fintech and support services to the UK retail financial services sector, has released a trading update for the six months to 30 June 2022, which reveals: Core revenue grew

    OnTheMarket Plc

    OnTheMarket analyst Zeus confident in forecasts

    Foxtons, one of London’s leading estate agencies with more than 50 interconnected branches across London, has signed an agreement to advertise its UK residential sales and letting properties at OnTheMarket plc (LON:OTMP). Zeus view: Foxtons, the

    SpaceandPeople analyst Zeus restores estimates and valuation

    SpaceandPeople plc (LON:SAL) secures, sells, and manages flexible space for brand experiences, short term promotions and retailing in high footfall venues for its customers, including in shopping centres and travel hubs. The Group has issued a

    Lookers Plc

    Lookers shares are still undervalued says Zeus

    Lookers plc (LON:LOOK) has released an H1 trading update reporting a continuation of strong performance year to date. H1 2022 underlying PBT is expected to be c. £45m and Management anticipate full year PBT will also

    Inchcape

    Inchcape performance exceeding expectations says Zeus

    Inchcape plc (LON:INCH) has released another positive trading update, with performance exceeding expectations so far this year. This follows on from a positive Q1 update on 28 April. Through quarterly improvement in Distribution volumes and operating

    boohoo Plc

    Boohoo Group analyst Zeus sees a strong performance in Q1

    ¨ Q1 financial highlights: Boohoo Group plc (LON:BOO) revenue of £445.7m is -8.3% YOY vs. a strong comp (Q1 FY22 revenue +32.1%), in line with Zeus’s forecast and management’s previously stated guidance. Gross sales growth remained