Y Ventures Group - CIMB Research 2017-09-12: E-commerce Proxy

Y Ventures Group - CIMB Research 2017-09-12: E-commerce Proxy Y VENTURES GROUP LTD. 1F1.SI

Y Ventures Group - E-commerce Proxy

  • Y Ventures Group (YVEN) is a Singapore-based online e-commerce and data analytics provider.
  • 1H17 revenue grew 47.1% yoy due to higher sales of goods on online marketplaces but YVEN slipped into net loss of US$0.2m due to one-off IPO-related expenses.
  • YVEN aims to expand its online presence in the UK, Europe, Northeast and Southeast Asia, expand its product range and enhance its data analytics capabilities.
  • YVEN is trading at a historical FY16 P/E of 24.3x.

E-commerce retailer and data analytics provider 

  • YVEN was listed on SGX’s Catalist Board on 11 Jul 17 at a price of S$0.22. 
  • Founded in 2003, the company is a Singapore-based data analytics-driven e-commerce retailer and distributor, with presence on multiple online marketplaces, including Amazon, eBay, Qoo10, Lazada and Tokopedia
  • Key products on sale are books (mainly academic books and textbooks), home and living items (clocks), and fast-moving consumer goods (instant coffee mix and soy milk). “JustNile” is its in-house brand of home and living products.

From online bookshop to… 

  • According to management, about 80% of sales in FY16 were derived from the sale of books. Management plans to deepen its existing product categories and expand into new product categories. 
  • The company currently manages and distributes approximately 5,500 SKUs of active merchandise through various online marketplaces.

Tie-up with bigger brands 

  • On 14 Aug 17, YVEN announced that it will form a JV with Toscano Pte Ltd for the marketing, distribution and online retail of men’s leather accessories under an online-only private label line, Faire Leather Co. 
  • YVEN will be responsible for the provision of actionable information (via its data analytics capability), and coordination of the online distribution and fulfillments of these products.

New economy exposure 

  • YVEN offers exposure to the fast-growing online e-commerce market in the US, as well as Asia, as the company only sells online. The stock also offers exposure to the rapidly growing data analytics market. 
  • YVEN has developed its own proprietary data analytic algorithms that can help third-party brand owners improve their sales and better manage inventory.

E-commerce potential 

  • According to the company’s presentation materials, the global internet retailing market is expected to expand by a CAGR of 10.7% over 2016-2020F, to reach US$1.8tr by 2020F.
  • The US internet retailing market is expected to grow at a CAGR of 13.6% over 2016- 2020F to reach US$0.5tr by 2020F, while the Asia Pacific internet retailing market is expected to grow at a CAGR of 12.4% over 2016-2020F to reach US$0.8tr by 2020F.

Key risks 

  • YVEN has a major customer (Zhoukoudian Trading, a wholesaler of books) that accounted for 33.8% of its FY16 sales. The Elsevier Group (a supplier of medical textbooks and reference materials) accounted for 66.6% of YVEN’s FY16 purchases.
  • Historical valuations YVEN is trading at a historical FY16 P/E of 24.3x versus the global peer average of 80.4x. Historical FY16 P/BV is 14.3x versus the global peer average of 10.4x.

William TNG CFA CIMB Research | http://research.itradecimb.com/ 2017-09-12
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