Internet Discussion Forum HotCopper to List on ASX
Upside stems from new revenue streams, client engagement and corporate partnerships, but the company does not intend to pay a dividend and projects a loss for FY17.
Almost every Australian investor has heard of HotCopper. Hotcopper.com is Australia’s largest stock market internet discussion forum with 235,000 registered members and over 600,000 monthly visitors to the website. The parent company HotCopper Hodlings Limited generates revenue from commercial and corporate advertising across its online channels. The company seeks to list on the ASX by raising $12.2 million shares with over 80 per cent of the proceeds being sold to the vendors.
HotCopper has nearly tripled the total number of visitors since January 2013 and is on track to increase revenue for the third consecutive year. The company has a strong competitive position with the number of site visits being 18 times greater than its nearest “competitor”. Ongoing top line growth and cost control will be the primary catalyst, while consolidation of the network and corporate partnerships could present additional upside.
Earnings have historically been volatile and while management is projecting a significant increase in expenses, the company’s reliance on external capital may not entirely be eliminated. Entry barriers in the internet industry are low and HotCopper may be subject to increasing competition. Overall we believe that lumpy earnings, rising costs and competition are primary hurdles.
Upside stems from new revenue streams, client engagement and corporate partnerships, but the company does not intend to pay a dividend and projects a loss for FY17. The position of the Managing Director has yet to be confirmed, which creates sufficient uncertainty for this float.
Company: HotCopper Holdings Limited
ASX Code: HOT
Shares on Offer: 110m
Listing Price: $0.20
Market Capitalisation: $22m
Listing Date: September 8
Author: Simon Herrmann
Sep 05, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.