Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
magazineMySale is a mega momentum trade
Growth-focused investors should open a position in MySale (MYSL:AIM), an international online retailer with momentum at its heels and ripe for near-term upgrades. A beneficiary of sterling weakness, the £169.8m cap is a compelling play on channel shift and has the balance sheet strength to invest behind its global flash sales brands and in selective acquisitions.
Flashy operator
MySale operates online ‘flash sales’ sites in Australia, New Zealand, South-East Asia and the UK. Flash sales are time-limited sales events in which fashion, beauty and homeware products are offered to a closed member base. Customers get access to leading brands at low prices, while firms have an avenue to dispose of excess stock at a discount.
Momentum is building at MySale, whose half year results (1 Mar) to December revealed a swing from losses of A$0.2m to an underlying profit before tax of A$0.6m. Online revenue rose 19% to A$127.1m and MySale, which closed the period with a bumper A$29.1m net cash in the coffers, reported 19% year-on-year growth in the active customer base to 870,000.
Growth platform
Growth hopes are high with a strategy to re-engage customers proving successful. MySale’s highly scalable Retail Marketplace platform, which includes the Deals Direct, OO.com and Top Buy sites in Australia and New Zealand, is also making progress.
Sports Direct International (SPD) was the original flagship retailer to join this retail marketplace, while a more recent collaboration with US-based gilt.com, part of Hudson’s Bay, has only widened the product range.
Analysts also welcomed MySale’s acquisition (6 April) of Identity Direct for A$2.94m from the administrator. Bringing a valuable database of 66,000 active customers, Identity Direct also adds an additional revenue stream in personalised gifts and products and the complementary acquisition should yield significant synergies.
Could Share Price Double?
N+1 Singer analyst Matthew McEachran’s fair value estimate increased to 163p on the back of Identity Direct. In fact, N+1 Singer can ‘see a potential route-map back to 226p over 12-18 months’, suggesting MySale’s shares could more than double. The broker’s forecasts for the year to June 2017 point to adjusted pre-tax profits of A$2.4m, ahead of a conservative-looking A$4.8m and A$7.6m for 2018 and 2019 respectively.
Based on forward earnings estimates of 2.2 cent (1.27p) and 3.5 cent (2.02p) for 2018 and 2019 respectively, MySale trades on punchy forward PE ratios of 86.6 and 54.5, although strip out the cash and the valuation is lower. (JC)
MySale (MYSL:AIM) 110p
Stop loss: 88p
Market value: £169.8m
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
