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Kogan.com Limited (ASX:KGN) is a small-cap company with the market capitalization of circa $383.27 Mn as of March 01, 2019. Kogan.com was founded in 2006 and contains a portfolio of retail and services businesses which comprises of Kogan Retail, Kogan Marketplace, Kogan Mobile etc. The company generates most of its revenue and profit via selling of goods and services to consumers in Australia. The company provides products released under KGNâs in-house brands like Kogan, Ovela, Fortis and Vostok and third-party products obtained from imported and domestic brands like Apple, Canon, Samsung to name a few.
KGN also generates revenue from Kogan Travel, Kogan Mobile and such. Recently, the group has released its 1H FY19 results wherein revenue grew by 10.6% to $231.78 Mn over the prior corresponding period. It was majorly driven by the active customer growth and investments in inventory and marketing driving revenue growth in Exclusive Brands and Partner Brands. However, profit before tax was down $1.5 million as compared to the prior corresponding period. It was primarily impacted by investments in the Companyâs warehousing footprint and marketing. NPAT stood at $7.4 Mn in 1HFY19 against the prior corresponding period, showing the downfall of 11% on a PCP basis. Before adjusting for the impact of changes to accounting standards to reflect AASB 15 effective from 1 July 2018, net profit after tax attributable to members came in at $7.6 million in 1HFY19 (1HFY18: $8.3 million). The statutory EBIDTA of the group stood at $13.3 million in 1HFY19 whereas in 1HFY18 it stood at $14.4 million. The Net tangible assets backing per ordinary shares were at $0.42 on 31 December 2018 as compared to $0.45 on 31 December 2017.
Business Performance: Global Brandsâ worldwide sourced third-party brand has been slipping YOY revenue after the change to GST laws and the seeming evasion of GST by foreign websites. Global Brands has reduced from 18.3% in FY18 to 7.5% in 1HFY19.
Also, various brands have moved from Global Brands to its Partner Brands Product Division, which impacts the comparative growth. The sombre demand for freshly released products from Apple decreased the rise in revenue. Gross sales per customer were impacted by a reduction in high-value Apple sales and the introduction of a long-tail of lower value items on its websites.
Operating costs: Throughout 1HFY19, the KGN constantly capitalized in marketing activities and growing its warehousing footprint, which comprised of a few up-front costs. The investments were expected to provide efficiencies in 2HFY19 and beyond, in addition to enhancing the customer experience in some geographic regions. Operating expenses in 2QFY19 represented 12.9% of revenue, compared to 13.7% for the first half of FY19 (1HFY18: 12.7%) demonstrating that some of the costs were not ongoing, and the successful implementation of various efficiency measures.
Outlook: In 2019, the company anticipates the growth of Active Customer base, Exclusive Brands, Partner Brands, Kogan Mobile Growth in Kogan Insurance and Kogan Internet. The company would be launching Kogan Mobile NZ, Kogan Money Super and Kogan Money Credit Cards (with significant upfront incentives due on launch, in one instance) along with the Launch of Kogan Marketplace platform.
Stock Performance: The stock price of the company closed at A$4.110 (as at 01 March 2019), down by 58.9% from its 52-week high of $10.0. The company has a market capitalization of circa A$383.27 million with 93.71 million shares outstanding. The stock has given a negative return of 41.24% in last six months and a negative return of 54.76% in last one year. In the last five days, the company had delivered the return of -6.62%.
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