Catcha Media - iCar Comes on Board

We are positive on Catcha Media (CHM)’s disposal of its 50% stake in Auto Discounts SB (ADSB) in return for a 75% stake in iCar Asia Ltd. iCar Asia would eventually seek a listing on the Australian Stock Exchange (ASX), latest by 30 June 2013. Similar to sister company, iProperty, we see iCar becoming a leading regional online advertising business serving the booming used car trading industry. We are optimistic on the portal’s long-term growth prospects, which we see it replicating the success of iProperty. Hence, we maintain our BUY call on CHM, with our FV unchanged at RM1.03, based on a 12x FY12 PER.

iCar – a regional car web portal in the making. CHM will dispose of its 50%-owned subsidiary ADSB (owner of carlist.com.my) and 100%-owned Catcha Lifestyle to iCar Asia Ltd, a company newly set up in Australia. iCar will also acquire the remaining 50% stake in ADSB from its three co-founders, as well as two other websites, namely Mobil123 and Autospinn. Mobil123, owned by CHM’s sister company iProperty Group, is Indonesia’s largest on-line automotive advertising website for new and used cars. Autospinn, owned by Mr Metee Liewrojanasakul, is a leading online automotive news website for Thai car enthusiasts. After the completion of these corporate proposals, iCar will seek a listing on ASX, which we gather may materialize latest by 30 June 2013.

Tapping the booming auto industry and strong internet growth. Riding on the booming secondary automobile market as well as the proliferation of e-commerce, we reckon that this venture would prove fruitful in the long run. We see strength in the region’s used car market, in tandem with the growing Indonesian and Thai economies. We believe that this proposal would help CHM capitalize on the growing internet traffic within the region. We gather that the Indonesian and Thai auto markets have been registering CAGRs of 59% and 14% respectively for the number of registered vehicles since 2000. The number of new vehicles in Indonesia has been growing at a steady 20%-25% p.a while Thailand’s has been at the steady mid-teens annually. We believe that tapping into the regional automotive market, which is typically accompanied by big advertising budgets, would open up a potentially lucrative earnings stream.

Maintain BUY. We are positive on CHM’s maiden venture into the regional auto market. On top of that, we expect its e-commerce business, Haute Avenue, to blossom going forward, capitalizing on its healthy membership growth and the growing prevalence of internet shopping among Malaysians, especially young working adults. There are no changes to our estimates for now, pending more details on iCar’s financials. We maintain our BUY call, at an unchanged FV of RM1.03, based on 12x FY12 PER.

Source: OSK