Camplify Holdings: Offshore growth promising as lockdowns ease

About the author:

Steven Sassine
Author name:
By Steven Sassine
Job title:
Associate Analyst
Date posted:
23 October 2021, 9:00 AM
Sectors Covered:
Diversified Financials

  • Camplify Holdings (ASX:CHL) reported its 1Q22 trading update, which showed continued growth for the underlying business despite widespread lockdowns. The key positives in the result being continued growth in Australia (GTV +52% on pcp) led by QLD/WA and UK/Spain showing promising early momentum as restrictions ease.
  • 1Q22 GTV of ~A$10.5m was up 69% on pcp with revenue of ~A$3.1m (take rate of 26.9% was ~120bps better than the FY21 result).
  • We alter our FY22F/FY23F/FY24F EBITDA forecasts by -26%-+75% on stronger take-rate assumptions, near term expense forecast changes (additional marketing spend) and removal of some margin conservatism post offshore growth evident post lockdowns easing. Our price target increases to (login to view).
  • Structural tailwinds should continue to emerge as regions ease travel restrictions.
  • We continue to like the CHL model (particularly the prodigious growth opportunity), however given a tripling of its share price since listing, we move to a Hold recommendation (from Add) and await further datapoints/catalysts.  

1Q22 trading update shows promising growth despite lockdowns

CHL’s 1Q22 trading update showed continued growth of the underlying business despite widespread lockdowns across some Eastern States of Australia and New Zealand.

Pleasingly, CHL’s northern hemisphere operations (UK/Spain) showed signs of initial traction with strong growth across key metrics as restrictions eased. In our view, it was a solid quarterly performance with AU and the seasonally strong quarter for UK/Spain offsetting a broadly flat performance in NZ (lockdown impacted).

Post restrictions easing as vaccine uptake reaches key Government milestones, we anticipate further bookings momentum across the platform.

Key update details

CHL reported 1Q22 GTV of ~A$10.5m (+69% on pcp), with UK GTV of ~A$2.2m (+152% on pcp) and Spain producing ~A$200k of GTV (from a standing start). AU GTV grew by ~52% on pcp (led predominantly by QLD and WA), whilst NZ was broadly flat on pcp with rolling lockdowns and international border restrictions impacting the North and South Island.

CHL’s quarterly take rate of 26.9% was up 120bps on FY21 due to a higher take up of additional products (e.g. insurance cost reduction). Revenue for 1Q22 was up 106% on pcp to ~A$3.1m.

Management pointed to elevated marketing spend in the quarter (~A$1.4m) and RV owner acquisition initiatives (SEO and digital channels) in preparation of post-lockdown activity and the seasonally busier 2Q/3Q in the Southern Hemisphere. CHL has grown its RV fleet to ~6.5k (vs ~6.2k at IPO).

On recent product launches, management commentary suggests the addition of towing vehicles/ancillary products has begun increasing average order sizes in some instances whilst the RV manufacturing product has seen a steady flow of inquiries (acknowledging lockdowns had impacted RV manufacturers in VIC).

Changes to forecasts

We alter our FY22F/FY23F/FY24F EBITDA forecasts by -26%-+75% on changes to our take-rate assumptions (factoring in additional revenue from ancillary products), as well as changes to near term expense forecasts.

Our outer year forecasts include further operating leverage as the business scales, improved revenue growth assumptions and we remove some margin conservatism with the platform now showing growth offshore. With lockdowns easing, we also de-risk our relative value multiples to an extent. 

Our valuation is derived using an equally-weighted blend of a DCF and relative value methodologies. Our price target increases to (login to view) on the above changes.

Investment view

CHL’s management team has shown an ability to build out a successful, scalable platform. We continue to like the CHL model, particularly the prodigious growth opportunity both domestically and offshore.

Whilst structural travel tailwinds should continue to emerge as regions begin easing restrictions, a tripling of CHL’s share price since IPO has us viewing the current price as a good balance between long-term growth and broader expansion risks.

We move to a Hold recommendation.

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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.

Solid top-line outcome: BAP’s 1Q22 revenue was flat on the pcp, an extremely resilient result given the extent of lockdowns in the period (~70% of stores impacted) and the strength of the pcp (cycling 27% growth). Composition comprised: Trade +2%; NZ -10%; Retail -12%; and Specialist Wholesale +7%. Overall, BAP stated that non-lockdown areas are outperforming expectations. ▪ 1Q22 trade & retail: Trade/Burson revenue was up +2% on the pcp (LFL sales - 1%; cycling 8% pcp); NZ/BNT revenue was down -10% (LFL sales -15%; cycling +4%); and Retail/Autobarn revenue was down -12% (LFL sales -16%; cycling +36%). Within the Retail segment, online sales were +80% on the pcp. Stores percentages impacted by lockdown were: Trade 70%; NZ 100%; and Retail 50%. ▪ Specialist segment results: Specialist wholesale revenue is up 7% on pcp, with Auto electrical/Truckline divisions ‘performing strongly’; and WANO underperforming. ▪ GM pressure expected to be temporary: BAP stated GM was stable across Wholesale and NZ (45% of FY21 revenue); and down ~50bps Trade and Retail (~55% of FY21 revenue), driven by promotional and online pricing in lockdown areas (we assume no margin pressure witnessed in non-lockdown areas). BAP expect margins to revert once lockdowns ease. ▪ The cost base has increased vs pcp, a function of duplicated DC costs (commencement of new VIC DC), and higher group and team member support (covid related) costs. BAP noted FY22 store rollouts and refurbs are on track.

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