Catcha Media - Getting Some Shine From iCAR Listing

THE BUZZ  
iCar Asia made an impressive debut on the Australian Stock Exchange (ASX) yesterday as its share price ended the day at AUD23.5 cents, 18% above its IPO price of AUD20 cents.  Catcha Media has 38% equity interest in iCar Asia.

OUR TAKE  
Briefly on iCar IPO. iCar Asia listed with an initial market cap of AUD34m (RM110m), based  on  the  IPO  price  of  AUD20  cents.  The  company,  set  up  in  Australia,  owns  car web  portals  in  the  three  emerging  markets  of  Malaysia,  Thailand  and  Indonesia.  The portals  from  these  respective  countries  are  Carlist.my,  Autospinn  and  Mobil123.  The stock  closed  18%  higher to  AUD23.5  cents on  its  first  day  of  trading.  CHM  is  currently the  major  shareholder  of  iCar  Asia,  with  a  38%  stake,  followed  by  its  parent  company, Catcha Group, with a shareholding of 13%. CHM’s sister company, iProperty, has a 7% stake  in  iCar  while  Teoh  Yew  Jin,  the  co-founder  of  Auto  Discounts,  owns  4%  of  iCar Asia shares. iCar’s public shareholding is approximately 36%.

Positive for CHM. Based on CHM’s 38% stake in iCar and a market cap of RM110m, CHM’s stake in iCar is worth RM42m. Stripping off this amount from CHM’s current market cap of RM74m, the group’s market cap excluding iCar would be about RM32m, implying a PE of 7x on its FY12 EPS of 4.7 sen. We deem this valuation undemanding, judging from the PEs of the company’s peers such as Jobstreet  and  iProperty,  whose PEs range from 16x-20x.

Positive on portal’s long-term growth potential. Maintain BUY. As we stated in our 5 July 2012 report, “iCar Comes on Board”, we are positive on the company’s maiden foray  into  the  regional  auto  market  via  this  regional  car  web  portal  catering  to  the booming  auto  industry.  Based  on  historical  pro-forma  numbers,  iCar’s FY11  revenue soared 960% y-o-y but its losses jumped 46% y-o-y owing to high operating costs such as  marketing  expenses.  Nonetheless,  we  deem  this  satisfactory  considering  that  the company  is  a  young  start-up  and  at  a  stage  where  it  would  typically  require  heavier investment  to  ensure  that  its  business  comes  to  fruition  later.  Similar  to  iProperty,  we expect iCar’s revenue to grow at a CAGR of at least 150% over the next four to five years and become profitable by 2015. Note that iProperty’s revenue  has  grown  at  a CAGR  of  74%  from  2007  to  2012.  Meanwhile,  its  share  price  has  risen  by  more  than 250% since its listing in 2007 and is currently trading at a FY12 PER of 20x.  All in, we are  maintaining  our  BUY  call  on  CHM,  with  our  RM0.77  FV  based  on  12x  FY13  PER. We make no changes in our forecasts while waiting to see how iCar performs.

Source: OSK