Camplify Holdings: Some tailwinds into the 4Q

About the author:

Steven Sassine
Author name:
By Steven Sassine
Job title:
Associate Analyst
Date posted:
28 April 2022, 8:00 AM
Sectors Covered:
Diversified Financials

  • Camplify Holdings (ASX:CHL) recently released its 3Q22 trading update which, in our view, showed solid growth across key business metrics despite what remained a challenging operating environment (i.e. Omicron outbreaks and East Coast weather events).
  • 3Q22 GTV of ~A$13m was up ~70% on pcp (+10.5% on the sequential quarter), with revenue up ~110% on pcp to A$4m (implying a 3Q22 take rate of 29.4%, ex van sales). YTD the take rate (ex van sales) is a robust ~30.3%.
  • With the approval of the Mighway and SHAREaCAMPER (SC) acquisition by the NZCC, management expects the deal to complete in 4Q22 bringing over 900 RVs to the CHL platform.
  • We lower our FY22F/FY23F/FY24F topline estimates by ~8-9%, taking a slightly more conservative approach given the current operating environment. This has been offset by favourable revisions to some of our expense lines (which were arguably more punitive in the near term). Our price target remains unchanged at (login to view). Add rating maintained.

3Q22 update

CHL released its 3Q22 trading update which showed strong growth across key business metrics in what remained a challenging operating environment (i.e. Omicron outbreaks and East Coast weather events such as heavy rainfall and severe flooding).

For the quarter, CHL added ~24k customers to its marketplace and continued to grow its RV fleet (now over 8.3k, +46% on pcp).

Details worth noting

3Q22 GTV of ~A$13m was up ~70% on pcp (+10.5% on the sequential quarter), as CHL’s offshore regions continued to gain momentum with the UK and Spain seeing substantial GTV growth on pcp (>400%).

Average booking value for the quarter remained broadly consistent with 2Q22 (~A$1,130), with management expecting this to rise with further contributions from the offshore platforms. 

Revenue for the quarter was A$4.1m (+~110% on pcp), implying a 3Q22 take rate of 29.4% (ex van sales, 31.6% including van sales). The annual take rate YTD is a robust ~30.3% (ex van sales).

The temporary accommodation program has seen a ramp up post the recent flooding events on the East Coast of Australia, with CHL seeing an uptick in Insurance bookings (generally a booking period between 12-24 weeks and at an average booking value of between A$12k-A$24k).

CHL has also recently announced a contract with the NSW State Government to supply vehicles to those flood impacted regions (with management’s estimate of deploying 200–500 RVs).

Other points to note:

  1. The acquisition of Mighway and SC was approved by the NZCC in the quarter, with closure expected 4Q22, adding over 900 RVs to the platform;
  2. CHL’s Hirer app was released improving potential friction points in the booking process (i.e. now offering ‘Rebooking’ and ‘Instant Book’ options);
  3. Cash receipts for the quarter were ~A$9.4m, with operating cash outflow of ~A$1.9m. CHL retains ~A$17m cash on balance sheet.

Investment view and valuation update

We lower our FY22-FY24 topline estimates by ~8-9% adopting a more conservative approach given the current operating environment. This has been offset by a favourable revision to some expense lines (which were arguably punitive), improving margins in the medium term.

Our valuation is derived using an equally-weighted blend of a DCF and relative value methodologies. Our valuation and price target remain unchanged at (login to view). Trading on ~1.5x FY22F EV/GTV and ~5x FY22F EV/Rev (MorgansE), we see these above-peer multiples as justified given CHL’s solid growth pathway both domestically and offshore.

Add rating maintained.

Risks

Two biggest risks faced by CHL are business disruptions (e.g. bush fires, other weather events, COVID) and those risks associated with being a dominant digital marketplace (e.g. platform risk and competition impacting margins).

Post recent acquisitions, deal integration risk is now a factor.

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Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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