SINGAPORE (Aug 22): UOB Kay Hian is initiating coverage on e-commerce company Y Ventures Group (YVEN) with a “buy” call and a target price of 28 cents.
“Investors can look forward to explosive growth while being rewarded through dividends,” UOB’s Singapore research team says in a retail report on Tuesday.
YVEN uses its proprietary data analytic systems to capitalise on price and feature trends to sell its products on leading e-commerce platforms globally. It currently retails over 5,500 products across more than 20 online marketplaces, including on Amazon, eBay, Qoo10, Lazada, and Carousell.
See also: Y Ventures raising funds to build data analytics, grow private label
“By examining historical price and feature trends, the company is able to predict supply and consumer preferences to a high degree,” says UOB. “This makes it attractive to third-party brands as they can partner YVEN to distribute products, analyse consumer demand and optimise prices to maximise sales.”
As such, UOB expects that YVEN will deliver “explosive organic top-line growth” in 2018. And with the company having a 20% dividend policy for 2017/18, shareholders are expected to reap the rewards in tandem with earnings growth.
The group’s core net profit is forecast to grow at a CAGR of 32% over 2016-2019, driven by new brands and expansion into other segments such as electronics and cosmetics.
Despite the rosy forecasts, shares of YVEN are currently trading more than 10% below its initial public offering (IPO) price of 22 cents.
See also: E-retailer Y Ventures to raise $7.7 mil from Catalist listing
At current levels, YVEN is trading at only 10.6x FY18 PE, compared to its peers’ average of 25.1x. On an ex-cash basis, it is trading at 8.4x FY18 PE.
“We believe the market has severely discounted the future prospects of the company due to a lack of understanding of its business model and lack of appreciation of new economy stocks from the local market,” says UOB.
As at 12.18pm, shares of Y Ventures are trading flat at 19.6 cents. This implies an upside of 42.9% on UOB’s target price.
