Following on from the positive AGM statement at the end of November, MySale Group PLC (LON:MYSL) has released an upbeat pre-close trading update. Group revenue increased 6% to A$136.1m, while higher margin online revenue, now representing over 90% of the total group, experienced a strong rate of growth of 18% to A$126.5m. As a result, gross margin showed continued improvement of 270bps driving a 17% uplift in gross profit to A$38.4m (versus A$32.7m). Strong trading for the half, combined with a carefully controlled cost base, led to a doubling in EBITDA to A$3.0m. Management are confident going into the second half period and following the increase in guidance at the end of November, the company remains comfortable with current full year forecasts. More detail and an update on trading will be given at the interims expected on 1st March 2017.
KPIs continue to improve indicated by a 19% increase in the active customer base. The focussed strategy on the core ANZ region in terms of concentrating marketing efforts on engaged customers with a higher lifetime value, as well as re-activating the membership base in ANZ, continues to pay off. This is reflected in a 19% increase in the active customer base to 870k from 731k YoY.
New partnership with gilt.com will help scale the group’s retail marketplace platform. MySale confirms that it has launched a strategic partnership with US online retailer gilt.com, which is part of the Hudson’s Bay Company. The partnership builds on the online retail marketplace that also has an exclusive Sports Direct supply relationship in ANZ. It is anticipated that the collaboration with gilt.com will add significant product selection and in multiple categories.
Overall view. MySale Group PLC continues to deliver against the management plan with improved operational 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 possible upside to come from new income streams including the retail marketplace. The shares are up strongly over the past month (+26%), 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 1.0x. 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 186p.
Carl Jackson, 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 against our goals. In ANZ we have continued to shift the emphasis of our marketing towards retention and re-engagement and have also seen good progress in the scaling 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.”
