Camplify Holdings: A good quarter in a tough environment

About the author:

Steven Sassine
Author name:
By Steven Sassine
Job title:
Associate Analyst
Date posted:
27 January 2022, 11:30 AM
Sectors Covered:
Diversified Financials

  • Camplify Holdings (ASX:CHL) has released its 2Q22 trading update. It was a good result overall, in our view, highlighting the underlying business momentum/platform resilience during a challenging quarter. 2Q22 GTV of ~A$11.8m (+48% on pcp, +12% on 1Q22), had CHL reaching 1H22 GTV of just over ~A$22m.
  • 2Q22 revenue of ~A$4m implies a robust quarterly take rate of ~31% (ex van sales), with 1H22 revenue of ~A$7m coming in ~6% ahead of MorgansF.
  • We lower our FY22F/FY23F/FY24F EBITDA forecasts by 0.3%-6%, with lower GTV forecasts offset by stronger take rate assumptions. Our price target rises marginally to (login to view) on the above changes, timing factor impacts of our DCF and a slight lowering of valuation multiples used (given recent sector de-ratings) Add maintained.

2Q22 trading update highlights platform resilience

Camplify Holdings (ASX:CHL) released its 2Q22 trading update, which in our view, highlighted the underlying business momentum and platform resilience in what was again a difficult operating environment (e.g. October restrictions impacting a key holiday booking period).

CHL also added ~20k new customers to the platform and grew its RV fleet to now over 7.3k.

Analysis

2Q22 GTV of ~A$11.8m was up ~48% on pcp (+12% on the sequential quarter), with the growth seen in UK and Spain over the period a result highlight, in our view (UK GTV +98% on pcp and Spain >1600% off a low base).

This bodes well for the Northern Hemisphere operations, showing signs of momentum coming into their peak seasons. 1H22 GTV (~A$22.3m vs MorgansF ~A$25m) was up ~57% on pcp, with the average booking value actually seeing a slight decrease 2Q on 1Q due to that October impact (~A$1,143 in 2Q vs ~A$1,235 in 1Q). 

Revenue in the quarter was ~A$4m (+~140% on pcp), implying 1H22 revenue of ~A$7.1m (vs MorgansF of A$6.7m), with the driver of this result being a stronger take rate for the quarter of ~30.1% (ex van sales). For the half, the take rate blends out to ~28.9% (ex van sales), which is ~200bps above the FY21 take rate. 

Regarding the UK operations, CHL has announced an agreement with Comfort Insurance (a UK based insurance company that has ~15% of UK RV’s on its insurance product).

At this stage, it is a marketing relationship, allowing Comfort Insurance (CI) customers to utilise the CHL platform and use their existing CI policy. CI will also actively market CHL to their customer base.

On the recently announced acquisitions of Mighway and SHAREaCAMPER, a decision by the NZCC is expected mid-March 2022.

Investment view and valuation update

We lower our FY22F/FY23F/FY24 EBITDA by 0.3%-6% with slightly lower GTV forecasts offset to a degree by higher take rate assumptions factoring in todays’ quarterly update. We continue to anticipate near term spend as CHL builds out in its newer geographies.

Our valuation is derived using an equally-weighted blend of a DCF and relative value methodologies. Our price target rises marginally to (login to view) on the aforementioned changes, timing factor impacts of our DCF and a slight lowering of valuation multiples given recent sector/peer de-ratings.

Trading on ~2.1x FY22F EV/GTV and ~7.5x FY22F EV/Rev we see these above-peer multiples as justified given CHL’s solid growth pathway both domestically and offshore. Add maintained.

Price catalysts

Upcoming price catalysts may include the 1H22 result on 28 Feb, any further commentary on the offshore build-out and the NZCC acquisition decision in mid-March.

Risks

Two biggest risks faced by CHL are business disruptions (e.g. bush fires, COVID, etc) 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.

Find out more

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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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