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KGN

Kogan.com Ltd Slips Over 20%

Tumul Sinha

Tumul is an experienced Equity Analyst with ASR Wealth Advisers. She holds a Master’s Degree in Finance from the University of Sydney. Her key industry verticals include Real Estate, Health Care and Technology.

Kogan.com Limited (ASX: KGN) has opened down over 22% this trading session, after releasing a business update highlighting that Christmas, Black Friday and Boxing Day sales were the highest ever. However, the market appears to have focused on the top line growth of Kogan’s exclusive brands, which showed an unexplained 17% (a big drop when compared to the 35% achieved last quarter). Kogan’s exclusive brands account for 50% of the company’s revenue mix. Furthermore, Kogan’s gross profit has declined from 28% to 9%, due to heavy discounting over the Christmas shopping period.

Kogan.com Ltd

Kogan.com Ltd (ASX: KGN) has slipped over 20% since opening this trading session after releasing a business update, which showed top line growth of 17% for exclusive brand products (compared to 35% from the previous period). Source: Yahoo.

 

The slowdown in top line growth rate hardly justifies a 20%+ plummet in share price, especially when considering the stock is now trading at 24x for 41% earnings growth in a tough Australian retail environment. As such it appears the market has overreacted to the news.

Kogan.com is an Australian portfolio of retail and services business including Kogan Retail, Kogan Marketplace, Kogan Mobile, Kogan Internet, Kogan Insurance, Kogan Health and Kogan Travel. Kogan was founded in 2006 and in 2016 acquired Dick Smith Holdings’ online business and floated on the ASX. The company highlighted a 10% growth in active customers year on year and marketplace growth of 44% in their business update. Additionally, Kogan has continued to deliver on its cost cutting strategy, evidenced by a decline in operating costs, as outlined in the update.

The news comes amidst a resoundingly positive past 12 months, which has seen Kogan investors enjoyed an 89% rally before today’s fall. The stock is now trading for $6.21 per share and is expected to pay a fully franked dividend of 1.8% this year.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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