SINGAPORE (Mar 5): A potential collaboration between Y Ventures Group and Singapore Post (SingPost) for the development of an e-commerce buying platform could be “very exciting,” according to UOB Kay Hian.
The platform will focus on cross-border purchases on behalf of consumers, as well as consolidated deliveries and logistics-related technology to enhance efficiency across the vertical logistics chain.
See: Y Ventures and SingPost in MOU to develop cross-border e-commerce buying platform
“Other than possibly working with a strong partner, we think the new e-commerce cross border buying platform is highly scalable,” says lead analyst Nicholas Leow in a retail report on Monday.
UOB Kay Hian is keeping its “buy” call on Y Ventures and raising its target price to 80 cents, from 65 cents previously, on the back of higher net profit forecasts for 2018-2019.
“We raise our 2018-19 net profit forecasts by 4% and 5% to factor in more third-party online sales and the new distribution rights of brands that were announcement previously,” says Leow.
But if Y Ventures is able to successfully pull off the new platform in the tie-up with SingPost, the analyst opines that there is room for even more upside.
“A sensitivity analysis suggests the successful implementation of the MOU could result in a higher target price of 97 cents to $1.14,” Leow says.
See: Y Ventures sinks into the red with US$0.9 mil loss in FY17
Over at Phillip Capital, lead analyst Paul Chew also remains upbeat on Y Ventures’ outlook.
“We expect strong sales growth stemming from its current publisher, maiden contribution from new book principals, launch of the recently secured 20 consumer brand names and momentum in its own branded products,” Chew says.
However, the brokerage is downgrading Y Ventures to “neutral”, from “buy” previously, after the recent run-up in its share price.
Since its initiation of coverage on Y Ventures on Jan 29, its share price has surged by some 54%.
“There has been no change in our fundamental view of the company,” says Chew, as the brokerage keeps its target price of 70 cents on Y Ventures.
“Y Ventures is riding on the boom in e-commerce through new product categories, expanding customer base and new project initiatives,” he adds.
As at 12.11pm on Monday, shares of Y Ventures are trading 3 cents up, or 4.4% higher, at 71 cents. According to UOB Kay Hian valuations, this implies an estimated price-to-earnings multiplier of 41.1 times, a price-to-book ratio of 11.9 times, and a dividend yield of 0.5% for FY18.
