Kogan.com Limited (ASX: KGN) owns a portfolio of retail and services businesses and earns the majority of its revenue and profit through the sale of goods to Australian consumers.
In an announcement made on 24th June 2019, the company communicated that it has entered into a multi-year agreement with Powershop Australia Pty Ltd (Powershop), under which Powershop will offer competitive power and gas services to Aussies under a new brand, Kogan Energy.
Along with low cost power and gas, the company has also put emphasis on providing first-class experience to its customers by using technology that will enable customers to easily track their energy usage at any given time.
It is expected that Kogan Energy will be launched before the end of CY2019. Through this new brand, the company will focus on simplifying the provision of power and gas for the general Australian public and make retail services more affordable via digital efficiency.
KGN’s stock was down by 2.924% during today’s intraday trade.
For the half year ended 31 December 2018, the company reported revenues from ordinary activities of $231.8 million, up 10.6% on the previous corresponding period (pcp), on the back of active customer growth and investments in inventory and marketing driving revenue growth in Exclusive Brands and Partner Brands. The company recorded statutory profit after tax attributable to members of $7.4 million and achieved statutory EBITDA of $13.3 million in 1H FY19.
Half year Results (Source: Company Reports)
Last year, the company launched five New Verticals: Kogan Insurance, Kogan Health, Kogan Pet & Kogan Life and Kogan Internet. These New Verticals achieved a gross profit of $0.8 million in FY18, $0.6 million of which was from Kogan Internet. The expansion of the company’s service offerings is consistent with its strategy to leverage its brand in partnership with the industry leaders, bringing best-in-market offers to its customer base. The company keeps a laser focus on meeting its customers’ needs and delivering great value.
Let take a quick look at some of Kogan’s verticals.
Kogan Retail & Kogan Marketplace: Through its disruptive, low-cost distribution platform, Kogan.com has become a part of a ‘Next Generation’ of online retailers. With data analytics, systems and culture and deep technological expertise of its management and staff, the company has created a vertically-integrated business model with a market-leading Private Label capability. Further, the company has a compelling range of in-demand third party brands, supporting website traffic and the cash generation.
A few months back, the company launched Kogan Marketplace to connect sellers with millions of shoppers and to provide customers with more choice than ever, which is a win-win situation for everyone. Kogan Marketplace works with brands and distributors who generate incremental sales with an exposure to the Kogan.com platform and marketing initiatives to the Kogan Community.
Kogan Mobile: Launched in October 2015, Kogan Mobile offers pre-paid mobile phone plans online in partnership with the Vodafone. The strong commercial relationship with Vodafone has translated into strong growth for Kogan Mobile, demonstrating the strength of the Kogan brand in powering new verticals. Kogan Mobile is a fantastic example of the potential of the company’s portfolio strategy. Kogan Mobile represented 14.9% of overall gross profit in FY18 and achieved a gross profit of $12 million. Less than three years since launch, Kogan Mobile has grown around 2% of the mobile phone market in Australia.
Kogan Travel: Launched in May 2015, Kogan Travel offers directly sourced holiday packages and travel bookings in addition to the hotel bookings through hotels.kogan.com and cruises through cruises.kogan.com.
Kogan Insurance: Launched in August 2017 in partnership with Hollard Insurance Company, Kogan Insurance offers general insurance covering homes, contents, landlords, cars and travel insurance, with a focus on value for money. During the second half of FY18, Kogan.com launched Kogan Pet, Kogan Life and Kogan Health Insurance offerings.
During FY18, the company on-boarded new and market-leading brands, expanded its Exclusive Brands range, and invested in inventory across its Product Divisions to bring the most in-demand products to customers at best-in-market prices. At the time of the 2018 Annual General Meeting, the company’s Chairman informed that the company is committed to delivering on its long-term strategy of building a portfolio of businesses.
In a business update provided on 18th April 2019, the company announced that its business has generated strong earnings growth in the March quarter, delivering a strong start to CY19. The company achieved 23.4% (YoY) Active Customer growth in the March quarter. At the end of the March quarter, the company had 1,589k active customers. During the quarter, Kogan Mobile active customers grew 40.6% on a year-on-year basis.
During the quarter, the company entered into a partnership with Eclipx Group Limited (ASX: ECX) to launch and operate an innovative new service called Kogan Cars, which will secure new cars at competitive prices from dealers across Australia while also enabling customers to trade-in cars from a wide range of makers and models.
In parallel, the company also launched a membership subscription service, Kogan First, during the March quarter. Kogan Insurance revenues for the March quarter increased by 73.6% on a year-on-year basis. The Gross Transaction Value growth was 17.5%, revenue growth was 9.5%, gross profit growth was 28.4% and EBITDA growth was 96.4% during the March quarter. For the nine months ended 31 March 2019, EBITDA was more than 15% higher than the prior corresponding period. During the quarter, the operating costs of the company increased by 4.4%.
Recently, in April 2019, the company amended its multi-option facility agreement with Westpac to increase its facility from $20 million to $30 million.
Now, let’s have a glance at Kogan.com Limited’s stock performance and the returns it has posted over the last few months. At market close on 24th June 2019, the stock was trading at a price of $4.980, down 2.924% during the day’s trade, with a market capitalisation of ~$480.83 million. The counter opened the day at $5.160, reached the day’s high at $5.280 and touched a day’s low at $4.950, with a daily volume of ~1,203,959. The stock has provided a year-to-date return of 46.99% and also posted returns of 54.52%, 40.93% and -17.79% over the past six months, three and one-month period, respectively. Its 52-week high price is at $7.760 and 52 weeks low price at $2.610, with an average volume of ~751,965.
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