Venture Advisory August 2017 report: Markets and company updates

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Venture Advisory August 2017 report: Markets and company updates

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Venture Advisory August 2017 report: Markets and company updates
Venture Advisory monthly report: Markets and company updates

Industry news

In August 2017, the Australian information technology sector [AXIJ] was up 1.7% while the telco sector [AXTJ] experienced a steep decline of 11.6%. Both the All Ordinaries [AORD] and ASX 200 [AXJO] were down 0.8% and 1.0%, respectively

Monthly wrap up

Share price performance and valuations

August’s best and worst performers:
  • Technology – Online retailer Kogan.com was up another 37% in August as investors continued to embrace the company following prospectus forecast beats post IPO
  • Media – Carsales.com was up over 10% as the company’s results were helped by a strong increase in its Domestic Private business and increased contributions from adjacent markets, such as tyresales and Redbook Inspect
  • Telco and ICT – After reporting a record result driven by strong growth in mobile subscribers, improved cost management and acquisition contributes, amaysim saw its share price rise 19% throughout August

M&A and investment activity

The market saw several transactions announced:
  • Webjet announced the acquisition of JacTravel, a market leading European B2B travel business for GBP200m
  • Wisetech announced the acquisitions of Prolink and CMS Transport Systems, providers of customs and forwarding solutions and road transport and logistics management systems, respectively
  • CBS Corporation entered into an agreement to acquire Ten Network Holdings following the Australian network’s move into administration
  • Affinity Equity Partners and KKR formally withdrew from their competing bids to acquire Vocus Group
  • Telstra and News Corp announced their intention to combine Foxtel and Fox Sports Australia into a new company

Technology Sector – Highlights

AUGUST SHARE PRICE PERFORMANCE (BEST AND WORST) — TECH

INDUSTRY UPDATE – TECHNOLOGY

Date Company Comments (all growth figures are based on pcp)
2 Aug 17 Webjet Announced the acquisition of JacTravel, a market leading European B2B travel business for GBP200m on a 10.5x FY17 EBITDA multiple. The acquisition will transform Webjet’s B2B business 'WebBeds', creating the #2 B2B player globally and in important European markets
8 Aug 17 Reckon Announced 1H17 revenue of A$50.1m (up 3.3%) and EBITDA of A$18.4m (up 2.5%) underpinned by subscription revenue growth of 8% YoY. The company aims to focus on volume growth across all businesses and entrenching the group as a true subscription business with strong online capability
9 Aug 17 Hansen Technologies Reported FY17 revenue of A$174.7m (up 17.3%) and EBITDA of A$45.1m (down 0.6%) impacted by currency headwinds. NPAT was A$23.9m (down 8.4%)
14 Aug 17 Wisetech Global Announced the acquisition of CMS Transport Systems, a leading provider of road transport and logistics management systems across Australia and New Zealand. The purchase cost is A$5m with further earnout potential of A$4m over 4 years related to key business deliverables
22 Aug 17 SMS Management & Technology Announced FY17 revenue of A$304.5m (down 7%), reported EBITDA loss of A$37.9m (FY16 A$15.7m) and net loss of A$42.1m (FY16 A$9.7m). The subdued earnings reflected weak sales in the SMS Consulting segment (down 10%)
23 Aug 17 Bravura Solutions Reported FY17 revenue of A$191.9m (up 3.9%) exceeding IPO prospectus forecast revenue of A$187.6m. Pro-forma EBITDA was A$32.6m (up 61.4%). For FY18, the company expects development capital expenditure to decrease as non-client funded development reduces and more development is client funded
24 Aug 17 Afterpay Holdings Reported FY17 revenue of A$22.9m (FY16 A$1.4m). Operating loss was A$14m (FY16 A$3.9m) and net loss was A$9.6m (FY16 A$3.6m)
28 Aug 17 Infomedia Reported FY17 revenue of A$70.5m (up 4%) and EBITDA of A$25.2m (up 21%) and NPAT of A$11.9m (up 16%)
31 Aug 17 Webjet Reported FY17 revenue of A$234.9m (up 52%), EBITDA of A$69.9m (up 90.7%) and NPAT of A$52.4m (up 146.6%)

SOURCE: Factset, AFR, ASX Company Announcements, Company websites

Note: Data collected 31 August 2017. See Appendix One for ticker and company details

Media Sector Highlights

AUGUST SHARE PRICE PERFORMANCE (BEST AND WORST) — MEDIA

INDUSTRY UPDATE – MEDIA

Date Company Comments (all growth figures are based on pcp)
1 Aug 17 Macquarie Media Announced the sale of its wholly owned subsidiary Satellite Music Australia SMA to Stingray Digital International for A$5.9m. The acquisition will help Stingray's broader expansion within the region
4 Aug 17 Carsales.com Reported FY17 revenue of A$372.1m (up 8.2%), EBITDA A$176.5m (up 4.0%) and NPAT of A$109.5m (up 0.2%). The company also declared full-year dividend of A$ 0.22 per share, (up 10%), to be paid on September 22, 2017
7 Aug 17 HT&E Launched a new division, HT&E Events after a joint venture with IKON Media & Entertainment. The division will create an Australian eSports business, Gfinity eSports Australia, launching Australia’s first city-based franchise league, ‘The Elite Series’
11 Aug 17 REA Group Reported FY17 revenue of A$671.2m (up 16%), EBITDA of A$380.9m (up 16%) and net profit of 228.3m (up 12%). Strong earnings were driven by a 14% increase in Australia and the inclusion of iProperty revenue for the full year
14 Aug 17 oOh!media Reported 1H17 revenue of A$173m (up 18%), underlying EBITDA of A$34m (up 27%) and NPAT of A$7.1m (up 18.3%)
16 Aug 17 SEEK Reported FY17 revenue of A$1,040.9 (up 14%), EBITDA of A$375.8 (up 5%) and A$201.5m (up 13%). The company also declared dividend of A$0.21 per share (up 11%). SEEK expects FY18 revenue growth to be in the range of 20-25% and EBITDA growth of 10%. It further expects reported NPAT in the range of A$220-230m.
16 Aug 17 Fairfax Media Reported FY17 revenue of A$1,742.7m (down 4.8%), while Statutory NPAT was A$83.9m vs. a loss of A$772.6m in FY16
11 Aug 17 Village Roadshow Reported FY17 revenue of A$1.0bn (down 3.1%) and net loss was A$65.6m vs. a profit of A$16.6m in FY16 owing to the Dreamworld incident of October 2016
25 Aug 17 Ten Network Holdings CBS Corporation entered into a binding agreement to acquire Ten Network Holdings. The acquisition also includes channel ELEVEN, which CBS Corporation already owns a 33% stake, channel ONE and Network Ten’s digital platform, TENPLAY

SOURCE: Factset, AFR, ASX Company Announcements, Company websites

Note: Data collected 31 August 2017. See Appendix One for ticker and company details

Telco and ICT Highlights

AUGUST SHARE PRICE PERFORMANCE (BEST AND WORST) — TELCO

INDUSTRY UPDATE – TELCO

Date Company Comments (all growth figures are based on pcp)
17 Aug 17 Telstra Corporation Telstra and News Corp announced their intention to combine Foxtel and Fox SPORTS Australia into a new company, offering premium sports and entertainment. News Corp will have 65% shareholding in the new company and Telstra will have 35%
21 Aug 17 Vocus Group Affinity Equity Partners and KKR withdrew from their bids to acquire Vocus Group
24 Aug 17 Megaport Reported FY17 revenue of A$10.7m (up 298%) driven by sharp increase in monthly recurring revenue to A$1.2m (up 294%), rise in customers to 738 (up 135%) and total ports sold to 1,829 (up 149%). Net loss was A$29.9m vs. a loss of A$21.4m in FY16
25 Aug 17 Melbourne IT Reported 1H17 revenue of A$91.7m (up 11%), EBITDA was A$15.3m (up 37%) and NPAT of A$7.9m (up 259%), driven by strong organic growth in Enterprise Services and substantial improvement in profitability of SMB
28 Aug 17 Bulletproof Group Reported FY17 revenue of A$49.2m (up 4%) owing to strong second-half performance due to changes in business operations and profitability. While, underlying EBITDA of A$2.2m (down 53%) and underlying NPAT loss of A$0.2m (vs. NPAT profit of A$0.8m) due to significant losses in first-half in the year
28 Aug 17 amaysim Reported FY17 statutory net revenue of A$326.7m (up 29%) and EBITDA of A$33.8m (up 35%). However, NPAT declined to A$11.5m (down 7%) due to increased tax expenses
28 Aug 17 Superloop Reported FY17 revenue of A$59.8m (up 755%) and reported EBITDA of A$4.6m (vs. an EBITDA loss of A$5.6m). Strong earnings were supported by transformative acquisitions of BigAir Group and SubPartners. The company has also declared Superloop’s maiden dividend of $A0.01 per share
30 Aug 17 Macquarie Telecom Reported FY17 revenue of A$219.7m (up 8%), EBITDA of A$40.3m (up 24.7%) and NPAT of A$14.2m (up 170%) driven by continued growth for Cloud Services and Government
30 Aug 17 NEXTDC Reported FY17 revenue of A$123.6m (up 33%) and EBITDA of A$49m (up 77%) driven by continuous rise of customer power consumption in line with the take-up of contracted customer capacity and modest improvement in corporate costs from ongoing business transformation projects

SOURCE: Factset, AFR, ASX Company Announcements, Company websites

Note: Data collected 31 August 2017. See Appendix One for ticker and company details

Appendix One

TECHNOLOGY MEDIA TELECO & ICT
3P Learning Ltd 3PL APN Outdoor Group Ltd APO amaysim Australia Ltd AYS
Aconex Ltd ACX Asia Pacific Digital Ltd DIG Bulletproof Group Ltd BPF
Afterpay Touch Group APT Carsales.com Ltd CAR Chorus Ltd CNU
Altium Ltd ALU Event Hospitality & Entertainment Ltd EVT Inabox Group Ltd IAB
ASG Group Ltd ASZ Fairfax Media Ltd FXJ Macquarie Telecom Group Ltd MAQ
Bravura Solutions BVS GTN Group GTN Megaport Ltd MP1
Computershare Ltd CPU HT&E HT1 Melbourne IT Ltd MLB
Crowd Mobile Ltd CM8 iCar Asia Ltd ICQ MNF Group Ltd MNF
Data#3 Ltd DTL Macquarie Media Ltd MRN NEXTDC Ltd NXT
ELMO Software ELO Nine Entertainment Co Holdings Ltd NEC Singapore Telecommunications Ltd Z74
GBST Holdings Ltd GBT News Corporation NWS Speedcast International Ltd SDA
Grays eCommerce Group Ltd GEG oOh!media Ltd OML Spark New Zealand Ltd SPK
Hansen Technologies Ltd HSN Pacific Star Network Ltd PNW Superloop Ltd SLC
Infomedia Ltd IFM Prime Media Group Ltd PRT Telstra Corporation Ltd TLS
Integrated Research Ltd IRI REA Group Ltd REA TPG Telecom Ltd TPM
IRESS Ltd IRE SEEK Ltd SEK Over the Wire Holdings Ltd OTW
iSelect Ltd ISU Southern Cross Media Group Ltd SXL Vocus Group Ltd VOC
iSentia Group Ltd ISD Sky Network Television Ltd SKT
Kogan.com Ltd KGN Seven West Media Ltd SWM
OFX Ltd OFX Ten Network Holdings Ltd TEN
Mobile Embrace Ltd MBE WPP AUNZ WPP
MYOB Group Ltd MYO Village Roadshow Ltd VRL
Reckon Ltd RKN
Retech Technology RTE
SMS Management & Technology Ltd SMX
Technology One Ltd TNE
Trade Me Group Ltd TME
Webjet Ltd WEB
Wisetech Global Ltd WTC
Xero Ltd XRO
zipMoney ZML