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Kogan.com Ltd (ASX:KGN) is an online retail company, established in 2006 and based out of Melbourne, Australia. It operates through approximately 2,000 brands across a range of categories such as consumer electronics, hardware, homewares, appliances, toys, and others; and also owns around 18 private label brands. Besides, the company provides other services including pre-paid mobile phone plans online; general insurance; directly sourced holiday packages; hotel bookings through hotels.kogan.com; travel bookings and insurance etc.
Recently, Kogan.com announced its financial results for the half year ended December 31st, 2018 (1H FY2019) highlighting record trading during peak Christmas period as the business realised benefits of ongoing investment in logistics, operations as well as marketing. As a result, the company reported the Gross Transaction Value (GTV) of $ 277.3 million, up 12.9% on the prior year (1H FY2018: $ 245.6 million), and Revenue of $ 231.8 million, up 10.6% on prior year (1H FY2018:Â $209.6 million). Besides, the Gross Profit was posted at $ 45.1 million, up 10.8% on the preceding year.
The EBITDA was derived at $ 13.3 million (1H FY2018 Trading EBITDA: $ 14.1 million). During the half year, the Company continued investing in marketing to build the brand image, and in expanding its warehousing footprint, which required some up-front costs. Yet, the company has already started to reap efficiencies in these costs and expects these to continue in the future.
At the end of the concerned period, the Company had net cash of $ 15.5 million and inventories of $ 92.9 million, which included $ 21.8 million of inventory in transit; and $ 71.1 million of inventory in the warehouse, reflecting the companyâs investments in inventory so as to meet consumer demand. As reported, 92.3% of the inventory in the warehouse was less than 120 days old, and more than 99.5% of it was less than a year old.
Currently, the Kogan retail business constitutes around 2% of the Australian eCommerce market. Various factors are propelling the strong growth momentum. The Companyâs active customers grew in the last 12 months by 376,000 (32.2%), totalling to around 1,542,000 at the end of the half-year. Moreover, significant year-on-year revenue growth of 26.1% on the previous 1H FY2018, was witnessed by the Exclusive Brands business, which represented 50.9% of overall gross profit in 1H FY2019. Meanwhile, Partner Brands business achieved year-on-year growth of 96.5% and represented 27.2% of overall gross profit.
At the end of the period, fully franked final dividend of 6.1 cents per share were paid out to the investors.
Kogan.com has a market capitalisation of AUD 411.38 million. Today (2:10 PM AEST, February 22), the KGN stock is trading at AUD 4.300, down 1.826%. Although, the stock performance over the last three months is quite impressive at 55.87% and the YTD return stands at 25.50% so far.
Going forward, the second half year (2H FY2019) has started well with unaudited management accounting for January 2019, showing year-on-year revenue growth of 13.1%, gross profit growth of 19.9%; and rising operating costs (including marketing costs, variable costs, people costs and other costs collectively) by 7.3%.
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