Kogan.com Ltd

ASX:KGN

Kogan.com Ltd

ASX:KGN
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$5.10 (-27.5%)
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#233
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11
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Reports (7) My Report Forum Investors
Forum Topics KGN KGN Message for CHill
Tom73
3 years ago

Good questions elpaso96 and great valuation and model CHill.

My valuation from Feb is very similar, I will attach to a straw for your reference which I didn’t at the time due to needing a better format (as you will see).  The only significant variances I have is around discount rate (9% Vs 10%) and perpetual growth rate (5% Vs 3%) which make a big difference in terminal value.  I just think KGN has a very very long runway (much like Amazon had and still does), which is totally underappreciated – but each to their own on this.

To Bear’s point on margins, a good one that I would go with normally, but as Chill points the Kogan marketplace is why they will grow.  My valuation explains this more so I wont repeat.

Great work and great questions everyone – model, test, model, test gets to the best!

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CHill
3 years ago

Nice model @Tom73. Good to see a few minds ticking over and asking questions. Our 2 models really highlight just how much a few small adjustments can result in a huge differnce in "fair value". Onto the next stock for me!

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Bear77
3 years ago

Hi @CHill, your attachment in your Business Model/Strategy straw for Kogan did not work - there is no file.  If the file is larger than 2Mb it won't get attached, or if it's the wrong format (the site likes JPG, PNG, PDF or DOC files, but not any other file types), and (finally) if there are certain characters in the file name - then the site will not accept the file.  One of those characters that the site dislikes in file names is the apostrophe (').  I found that a file called ABC'H1'Report.png would NOT be accepted, but if I changed the file name to ABC-H1-Report.png, it would work (example only).  Obviously, the site doesn't have any issues with the use of hyphens (-) in the file name.  Other potential problem characters are spaces, dots and some of the special characters found above the numbers on most keyboards (!@#$% etc). 

You can usually get the file to attach to your straw if you ensure (1) the file size is under 2 megabytes, and (2) is the correct file format (one of those 4 that Strawman.com likes - .jpg, .png, .pdf or .doc - being pictures, Adobe Reader files or Word documents) and (3) by simplifying the file name - including replacing any spaces, extra dots and other special characters with hyphens (-).

Hope that helps.

 

P.S.  Back in 2018 and I think in early 2019 as well I found I could copy and paste pictures into straws, and I still have a number of those old straws full of pictures (photos, images, graphs, etc.) still floating around this site - like my "#ASX Announcements and Stuff..." straw for ARB - about the 7th straw down - however we haven't been able to paste pictures or images into straws for a couple of years now here, so the only way to include them is via the "Attach File" feature in straws (not available in forum posts or in valuations) - and the "Attach File" feature has it's limitiations, as discussed above.

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CHill
3 years ago

Thanks @bear77 will repost now

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Bear77
3 years ago

Yep, that worked.  What was the issue?  File size, file name or file type?

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CHill
3 years ago

File name, didn't like the & I had in there. Thanks for the help

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Bear77
3 years ago

Your valuation for Kogan @CHill looks good, and quite comprehensive, however I'm not sure if they can keep increasing revenue at that rate every year as well as gradually increasing their gross margin % as you have suggested they will.  With a gross margin of 28%, there could be an argument mounted that they are already over-earning, and that history suggests that their margins are more likely to reduce over time than to increase.  However, if they DO achieve those metrics, then yes, they would be worth more than where they are trading now, but I'd want a decent MOS (margin of safety on your valuation) to compensate for the possibility of things not all going 100% to plan in terms of the optimistic assumptions in the valuation.

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CHill
3 years ago

Appreciate the feedback @bear77. The first 3 years of revenue growth are analyst expectations, usually when I do my DCFs I like to use my own numbers but in this case, I used theirs for simplicity. As for the remaining years I based my expectations on the following: Low penetration of ecommerce in Aus relative to the US and other countries, this sector should grow over time. I expect KGN to improve their market share of australian retail as ecommerce picks up traction. As for the improving gross margin, i do see your point however Kogan marketplace will only improve their gross margin as this sector of the business grows. What I haven't considered is the affect that Mighty Ape will have on their overall margins, I imagine there will be significant investment required to truly benefit in the synergies of these businesses.

 

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