SKO - Serko.com

[sb9]

Seems as though Aus international borders opining in couple of weeks has lit up the sp. Always good buying around or under $5 recently.

[whatsup]

Did I see that F B have lowered their valuation, not good for the subscribers of the recent C R !

[t.rexjr]

Did I see that F B have lowered their valuation, not good for the subscribers of the recent C R !

What did they lower it to?
They probably want to buy a few...

[Greekwatchdog]

What did they lower it to?
They probably want to buy a few...

Here you are.
NEUTRAL


Serko (SKO) materially downgraded its FY22 revenue guidance last week, citing the impact of the Omicron COVID-19 variant on business travel in its key markets, firstly in Europe in late 2021, and more recently in Australia and New Zealand. ​​​​SKO's share price has been hit by a combination of 1) a global technology sector de-rating, 2) travel related impacts related to the rise of the Omicron variant, and 3) stock specific disappointment on the speed and potential volume of transactions from the Booking.com contract. SKO also has yet to confirm the proposed acquisition for which it raised capital for in November 2021. We make a material cut to our target price as we take a more pessimistic view of SKO's ability to capture the European SME market, our updated WACC estimate based on a revised risk free rate, and the dilution impact from the recent capital raise. We retain our NEUTRAL rating given the high degree of earnings unpredictability, lack of execution/material cash generation to date, but note the stock does not look overly expensive vs the Nasdaq Emerging Cloud Index.


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NZX Code SKO
Share price NZ$5.50
Target price NZ$5.99 (from 8.20)
Risk rating High
Issued shares 118.7m
Market cap NZ$653m
Avg daily turnover 111.0k (NZ$779k)
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Financials: Mar/ 21A 22E 23E 24E
NPAT* (NZ$m) -29.4 -40.8 -35.3 -14.8
EPS* (NZc) -30.0 -34.4 -29.8 -12.4
EPS growth* (%) n/a -14.7 13.4 58.2
DPS (NZc) 0.0 0.0 0.0 0.0
Imputation (%) n/a n/a n/a n/a
*Based on normalised profits
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Valuation (x) 21A 22E 23E 24E
PE n/a n/a n/a n/a
EV/EBIT n/a n/a n/a n/a
EV/EBITDA n/a n/a n/a n/a
Price / NTA 7.0 5.8 8.2 9.2
Cash div yld (%) 0.0 0.0 0.0 0.0
Gross div yld (%) n/a n/a n/a n/a
What's changed?
Revenue: FY22/FY23/FY24 revenue decreased by -15%/-14%/-19% respectively
Target price: Reduced by -NZ$2.21 (-27%) to NZ$5.99
FY22 revenue guidance revised downwards due to Omicron impact
SKO downgraded FY22 revenue guidance -16% to between NZ$18m to NZ$20.5m from NZ$21m to NZ$25m, citing the impact of Omicron on business travel demand.​​​​​​​ It has been partially insulated from the impact of the new variant by the normal seasonal reduction in business travel during the December to January holiday period. The upper end of guidance assumes a gradual continuation of improving transaction volumes in all markets, excluding New Zealand, for the remainder of FY22. In contrast, the lower end assumes that volumes in all markets are materially lower than current levels.


We make material cuts to our forecast Booking.com joint venture revenue
We lower our Booking.com for Business joint venture revenue assumptions given the impact of Omicron and the potential risk for future variants to slow the return towards pre-pandemic volumes in Europe. This is in addition to the uncertain future of European corporate travel longer term. The speed and potential volume of transactions in regards to the JV with Booking.com has disappointed the market thus far, although we are sympathetic to the disruption caused by the impact of Omicron. We also make small cuts to our forecast US revenue assumptions following recent conversations with channel checks and industry contracts, which has suggested that SKO has made limited progress in the US over the past 12 months. We note the lack of any company update in regards to the proposed US corporate contract win in the recent release last week.

[t.rexjr]

Thanks for that. That's an interesting retrospective summary...
Red herring??

[winner69]

Things headingin rght direction at Serko

https://www.nzx.com/announcements/388757

[Rawz]

Things headingin rght direction at Serko

https://www.nzx.com/announcements/388757

Disappointing no upgrade.

Trading 27x revenue. No thanks.

[t.rexjr]

Market interest seems to have buoyed over the last week or so.
Time to pay closer attention to this one.

[Maxtrade]

Disappointing no upgrade.

Trading 27x revenue. No thanks.

Fair enough comment. Yet current SP still lends itself to some likely uptrend movement as things open back up and travel commences again wouldn't you agree, Markets can sometimes ignore the revenue if they see something coming back. They don't have the debt levels that AIR are facing for example the obvious will hold that SP back. The SP on SKO may be directly related to travel coming back which it already is in other parts of the world. Not sure on this one which way SP will head currently. Thoughts?

[Maxtrade]

Bargain Hunter buys at $4.50, probably one of the larger funds buying up more at these prices. Fisher Funds again? SP set to rally hard when it does.