Maintain BUY with a higher target price of S$0.65, based on a P/S of 2.3x (30% discount to peers). We see possible upside to our target price as investors appreciate the scalability of its business model and accord higher valuations, both on a P/S and PE basis.
· Great start to 2018. Y Ventures (YV) started 2018 very strongly. Firstly, it very successfully launched its online brand Faire Leather. This was shortly followed by a new share placement to a shareholder whom we deem strategic. Another positive is that it had secured online distribution rights for over 20 brands. We review these developments, amend our earnings forecasts and raise our target price to S$0.65 (from S$0.28/share previously). We move YV’s valuation benchmark to P/S (previously PE) to reflect its strong growth and scalability of its business model.
· Stunning success of Faire Leather...Since the launch of its online consumer leather goods brand – Faire Leather – on Kickstarter, interest has been very strong. The online functional luxury brand was launched in Nov 17 and Faire Leather has garnered sales of S$406,000 in less than 50 days, making it the most successfully-funded Kickstarter campaign ever launched in Singapore. Just to recap, Faire Leather is a joint collaboration between YV and Singapore’s homegrown leather goods company Tocco Toscano on a 51% (YV): 49% (TT) basis. The JV was only formed in 14 Aug 17 and the fast launch and good sales of Faire Leather in such a short period since the JV commencement is impressive.
· ...paving the way for potentially more new online brands. In our view, the successful launch of Faire Leather is further proof of the group’s data analytics capability. The record-setting Kickstarter campaign of Faire Leather could open up more opportunities for YV to collaborate with other companies to launch new products and create new online brands. This also indicates the scalability of its business model and positions YV well to be a builder of more successful online brands.
· New consumer distribution deals in the bag. In its press release dated 23 Jan 18, YV announced that it has secured online distribution rights for over 20 new brands such as personal care brand Footpure, consumer electronics brand Lowepro, health and wellness brand Shanti Switchel, F&B brand Mavella and maternity brand Mater Mothers’ Hospital, amongst many others. While these new brands may not immediately contribute significantly to bottom line given the need to build awareness, they provide for a solid start to 2018. On the average, we conservatively estimate that each of these brands could contribute revenue of US$100,000/p.a... (Read Report)
Source : UOB KayHian Research
Y Ventures Group - Fabulous Start To 2018. Target Price Raised To S$0.65
Shared By Stock Fanatic on Thursday, February 1, 2018 | 1.2.18
Posted on Thursday, February 1, 2018 |
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