Venture Advisory Monthly Wrap - August 2017

Key Takeaways

Webjet announced the acquisition of JacTravel, a market leading European B2B travel business for GBP200m

Wisetech announced the acquisitions of Prolink and CMS Transport Systems, providers of customs and forwarding solutions and road transport and logistics management systems, respectively

CBS Corporation entered into an agreement to acquire Ten Network Holdings following the Australian network’s move into administration

Affinity Equity Partners and KKR formally withdrew from their competing bids to acquire Vocus Group

Telstra and News Corp announced their intention to combine Foxtel and Fox Sports Australia into a new company

Telco and ICT Monthly Wrap
Telco and ICT Best and Worst Monthly performers

After reporting a record result driven by strong growth in mobile subscribers, improved cost management and acquisition contributes, amaysim saw its share price rise 19% throughout August

The 5 best and worst performers for the month of August 2017 were as follows:

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Key Company Announcements

Telstra Corporation (17 Aug 17) and News Corp announced their intention to combine Foxtel and Fox SPORTS Australia into a new company, offering premium sports and entertainment. News Corp will have 65% shareholding in the new company and Telstra will have 35%

Vocus Group (21 Aug 17)  - Affinity Equity Partners and KKR withdrew from their bids to acquire Vocus Group

Megaport (24 Aug 17) reported FY17 revenue of A$10.7m (up 298%) driven by sharp increase in monthly recurring revenue to A$1.2m (up 294%), rise in customers to 738 (up 135%) and total ports sold to 1,829 (up 149%). Net loss was A$29.9m vs. a loss of A$21.4m in FY16

Melbourne IT (25 Aug 17) reported 1H17 revenue of A$91.7m (up 11%), EBITDA was A$15.3m (up 37%) and NPAT of A$7.9m (up 259%), driven by strong organic growth in Enterprise Services and substantial improvement in profitability of SMB

Bulletproof Group (28 Aug 17) reported FY17 revenue of A$49.2m (up 4%) owing to strong second-half performance due to changes in business operations and profitability. While, underlying EBITDA of A$2.2m (down 53%) and underlying NPAT loss of A$0.2m (vs. NPAT profit of A$0.8m) due to significant losses in first-half in the year

amaysim (28 Aug 17) reported FY17 statutory net revenue of A$326.7m (up 29%) and EBITDA of A$33.8m (up 35%). However, NPAT declined to A$11.5m (down 7%) due to increased tax expenses

Superloop (28 Aug 17) reported FY17 revenue of A$59.8m (up 755%) and reported EBITDA of A$4.6m (vs. an EBITDA loss of A$5.6m). Strong earnings were supported by transformative acquisitions of BigAir Group and SubPartners. The company has also declared Superloop’s maiden dividend of $A0.01 per share

Macquarie Telecom (30 Aug 17) reported FY17 revenue of A$219.7m (up 8%), EBITDA of A$40.3m (up 24.7%) and NPAT of A$14.2m (up 170%) driven by continued growth for Cloud Services and Government

NEXTDC (30 Aug 17) reported FY17 revenue of A$123.6m (up 33%) and EBITDA of A$49m (up 77%) driven by continuous rise of customer power consumption in line with the take-up of contracted customer capacity and modest improvement in corporate costs from ongoing business transformation projects

Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading telco and ICT stocks at the end of the month is as follows:

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Telecom stocks were trading on an average forward EV / EBITDA of 9.8x and a median forward EV / EBITDA of 7.9x

Media Monthly Wrap
Media Best and Worst monthly performers

Carsales.com was up over 10% as the company’s results were helped by a strong increase in its Domestic Private business and increased contributions from adjacent markets, such as tyresales and Redbook Inspect

The 5 best and worst performers for the month of August 2017 were as follows:

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Key Company Announcements

Macquarie Media (1 Aug 17) announced the sale of its wholly owned subsidiary Satellite Music Australia SMA to Stingray Digital International for A$5.9m. The acquisition will help Stingray's broader expansion within the regionCarsales.com (4 Aug 17) reported FY17 revenue of A$372.1m (up 8.2%), EBITDA A$176.5m (up 4.0%) and NPAT of A$109.5m (up 0.2%). The company also declared full-year dividend of A$ 0.22 per share, (up 10%), to be paid on September 22, 2017HT&E (7 Aug 17) launched a new division, HT&E Events after a joint venture with IKON Media & Entertainment. The division will create an Australian eSports business, Gfinity eSports Australia, launching Australia’s first city-based franchise league, ‘The Elite Series’REA Group (11 Aug 17) reported FY17 revenue of A$671.2m (up 16%), EBITDA of A$380.9m (up 16%) and net profit of 228.3m (up 12%). Strong earnings were driven by a 14% increase in Australia and the inclusion of iProperty revenue for the full year

oOh!media (14 Aug 17) reported 1H17 revenue of A$173m (up 18%), underlying EBITDA of A$34m (up 27%) and NPAT of A$7.1m (up 18.3%)

SEEK (16 Aug 17) reported FY17 revenue of A$1,040.9 (up 14%), EBITDA of A$375.8 (up 5%) and A$201.5m (up 13%). The company also declared dividend of A$0.21 per share (up 11%). SEEK expects FY18 revenue growth to be in the range of 20-25% and EBITDA growth of 10%. It further expects reported NPAT in the range of A$220-230m.

Fairfax Media (16 Aug 17) reported FY17 revenue of A$1,742.7m (down 4.8%), while Statutory NPAT was A$83.9m vs. a loss of A$772.6m in FY16

Village Roadshow (11 Aug 17) reported FY17 revenue of A$1.0bn (down 3.1%) and net loss was A$65.6m vs. a profit of A$16.6m in FY16 owing to the Dreamworld incident of October 2016

Ten Network Holdings (25 Aug 17) - CBS Corporation entered into a binding agreement to acquire Ten Network Holdings. The acquisition also includes channel ELEVEN, which CBS Corporation already owns a 33% stake, channel ONE and Network Ten’s digital platform, TENPLAY

Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading media stocks at the end of the month is as follows:

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Media stocks were trading on an average forward EV / EBITDA of 8.8x and a median forward EV / EBITDA of 7.7x

Technology Monthly Wrap
Technology Best and Worst monthly performers

Online retailer Kogan.com was up another 37% in August as investors continued to embrace the company following prospectus forecast beats post IPO

The 5 best and worst performers for the month of August 2017 were as follows:

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Key company announcements

Webjet (2 Aug 17) announced the acquisition of JacTravel, a market leading European B2B travel business for GBP200m on a 10.5x FY17 EBITDA multiple. The acquisition will transform Webjet’s B2B business 'WebBeds', creating the #2 B2B player globally and in important European markets

Reckon (8 Aug 17) announced 1H17 revenue of A$50.1m (up 3.3%) and EBITDA of A$18.4m (up 2.5%) underpinned by subscription revenue growth of 8% YoY. The company aims to focus on volume growth across all businesses and entrenching the group as a true subscription business with strong online capability

Hansen Technologies (9 Aug 17) reported FY17 revenue of A$174.7m (up 17.3%) and EBITDA of A$45.1m (down 0.6%) impacted by currency headwinds. NPAT was A$23.9m (down 8.4%)

Wisetech Global (11 Aug 17) announced the acquisition of Prolink, a leading provider of customs and forwarding solutions across Taiwan and China

Wisetech Global (14 Aug 17) announced the acquisition of CMS Transport Systems, a leading provider of road transport and logistics management systems across Australia and New Zealand. The purchase cost is A$5m with further earn-out potential of A$4m over 4 years related to key business deliverables

SMS Management & Technology (22 Aug 17) announced FY17 revenue of A$304.5m (down 7%), reported EBITDA loss of A$37.9m (FY16 A$15.7m) and net loss of A$42.1m (FY16 A$9.7m). The subdued earnings reflected weak sales in the SMS Consulting segment (down 10%)

Bravura Solutions (23 Aug 17) reported FY17 revenue of A$191.9m (up 3.9%) exceeding IPO prospectus forecast revenue of A$187.6m. Pro-forma EBITDA was A$32.6m (up 61.4%). For FY18, the company expects development capital expenditure to decrease as non-client funded development reduces and more development is client funded

Afterpay Holdings (24 Aug 17) reported FY17 revenue of A$22.9m (FY16 A$1.4m). Operating loss was A$14m (FY16 A$3.9m) and net loss was A$9.6m (FY16 A$3.6m)

Infomedia (28 Aug 17) reported FY17 revenue of A$70.5m (up 4%) and EBITDA of A$25.2m (up 21%) and NPAT of A$11.9m (up 16%)

Webjet (31 Aug 17) reported FY17 revenue of A$234.9m (up 52%), EBITDA of A$69.9m (up 90.7%) and NPAT of A$52.4m (up 146.6%)

Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading technology stocks at the end of the month is as follows:

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Technology stocks were trading on an average forward EV / EBITDA of 13.6x and a median forward EV / EBITDA of 12.1x

Reference stocks

Our reference portfolio is as follows:

Telecom Stocks:

amaysim Australia Ltd. (AYS-AU), Bulletproof Group Limited (BPF-AU), Chorus Limited (CNU-NZ), Inabox Group Ltd. (IAB-AU), Macquarie Telecom Group Limited (MAQ-AU), MNF Group Limited (MNF-AU), Nextdc Limited (NXT-AU), SpeedCast International Ltd (SDA-AU), Superloop Ltd. (SLC-AU), Spark New Zealand Limited (SPK-NZ), Telstra Corporation Limited (TLS-AU), TPG Telecom Limited (TPM-AU), Vocus Group Limited (VOC-AU), Singapore Telecommunications Limited (Z74-SG)

Media Stocks:

APN Outdoor Group Ltd. (APO-AU), Carsales.Com Limited (CAR-AU), Domain Holdings Australia Ltd. (DHG-AU), Asia Pacific Digital Limited (DIG-AU), Event Hospitality & Entertainment Ltd. (EVT-AU), Fairfax Media Limited (FXJ-AU), HT&E Ltd (HT1-AU), iCar Asia Ltd. (ICQ-AU), Macquarie Media Limited (MRN-AU), Nine Entertainment Co. Holdings Pty Ltd. (NEC-AU), News Corporation Shs B Chess Depository Interests repr 1 Sh (NWS-AU), oOh media Ltd (OML-AU), Pacific Star Network Limited (PNW-AU), Prime Media Group Limited (PRT-AU), REA Group Ltd (REA-AU), Seek Limited (SEK-AU), SKY Network Television Limited (SKT-AU), Seven West Media Limited (SWM-AU), Southern Cross Media Group Limited (SXL-AU), Trade Me Group Limited (TME-NZ), Village Roadshow Limited (VRL-AU), WPP AUNZ Limited (WPP-AU)

Tech Stocks:

3P Learning Ltd. (3PL-AU), Aconex Ltd (ACX-AU), Altiumc (ALU-AU), Afterpay Touch Group Ltd. (APT-AU), Appen Ltd. (APX-AU), Big Un Limited (BIG-AU), Bravura Solutions Limited (BVS-AU), Catapult Group International Ltd. (CAT-AU), Citadel Group Ltd. (CGL-AU), Class Ltd. (CL1-AU), Crowd Mobile Limited (CM8-AU), Computershare Limited (CPU-AU), Data#3 Limited. (DTL-AU), DWS Limited (DWS-AU), ELMO Software Ltd. (ELO-AU), GetSwift Ltd. (GSW-AU), Gentrack Group Ltd (GTK-NZ), Hansen Technologies Limited (HSN-AU), Infomedia Ltd (IFM-AU), IRESS Limited (IRE-AU), Integrated Research Limited (IRI-AU), iSentia Group Limited (ISD-AU), Kogan.com Ltd. (KGN-AU), Link Administration Holdings Ltd. (LNK-AU), Impelus Ltd (MBE-AU), Melbourne IT Ltd (MLB-AU), Megaport Ltd. (MP1-AU), MYOB Group Ltd. (MYO-AU), Nearmap Ltd. (NEA-AU), Netwealth Group Ltd. (NWL-AU), Nextdc Limited (NXT-AU), OFX Group Ltd. (OFX-AU), Pro Medicus Limited (PME-AU), Pushpay Holdings Ltd (PPH-NZ), Reckon Limited (RKN-AU), Technology One Limited (TNE-AU), Webjet Limited (WEB-AU), Wisetech Global Ltd. (WTC-AU), Xero Limited (XRO-NZ), Zip Co Ltd. (ZML-AU)

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