@Bushmanpat I'll add some thoughts into the mix for a valuation of FDV.

To be clear at the start I like FDV and it remains a ~3% holding IRL.

Undertaking a valuation on FDV is difficult because it is hard to get a clear set of numbers to analyse.

The statutory accounts vary from the presentation documents due to the equity accounting of partially owned businesses in Zameen and Pakwheels. The ownership of LATAM entities has changed over recent years making comparison with prior years (FDV % ownership basis) misleading.

Due to the acquisitions and ownership % changes over years (with accompanying changes to SOI) I calculated the rev/share 2018 (5.7c) to 2022 (21.7c) representing CAGR of 40%.              

While FDV has been growing the headline revenue at a commendable rate (55% CAGR since 2019) I have raised concerns in previous Posts regarding the performance of some of the businesses.

To summarise I have extracted the financial results from various reports and highlighted the key revenue growth rates in the table below. Note that the table is based on 100% ownership (not FDV’s ownership portion).

Only the results from InfoCasas and Zameen are noteworthy.

Five (5) of the businesses are going backwards and the remainder are not overly inspiring.

Revenue from Zameen represents 60% of the gross revenue while InfoCasas represents 12%.

The remaining 13 businesses total 38% of revenue with mediocre growth demonstrated.

Any valuation incorporating growth forecast will be based primarily on the outlook for Zameen and InfoCasas.

I am having mixed thoughts on the financial performance of FDV.

Announcement 6 October 2022.

FDV announced that a portion of the future cash earn-out payments to the owner founders of Encuentra24 and Infocasas would be exchanged for equity in FDV Latam.

This is encouraging in that the ‘insiders’ being founding owners of Encuentra24 and Infocasas believe there is better value in receiving shares in FDV Latam rather than cash earn-outs. Big positive tick.

Looking back at the structure of the E24 buyout – FDV owned 26.3%, FDV paid OLX Group A$13.1M for their 36.2% stake. The amount for the remaining 32.6% owner/founder stake was not disclosed (ie subject to undisclosed earn-out provisions). Referring back to the CY21 accounts there is an amount of A$15,397,684 for Contingent Consideration which would value E24 at A$42.5M approximately. This represents 5 x revenue.

I mentioned at the time that growth would need to be spectacular.

The chart below for the 1^st half CY22 results indicates E24 half on half growth of only 8%.

In my mind the growth does not justify the amount being paid for E24.

Similarly, Infocasas with declining revenue half on half has a Contingent Consideration of A$38,577,959 in the December 2021 accounts.

All of the revenue growth in the FDV business is coming from Zameen (Pakastan) which is only 30% held. This is concerning given the recent flooding and global economic conditions.

FDV have previously guided for the CY22 revenue to be double (+) the half year result. The 3^rd QTR CY22 results are due shortly and if they start talking down previous guidance this would be a red flag.

Some interesting takes from the FDV half year presentation yesterday.

1.      Expect full year (CY) revenue to be double half year (+ some)  = $85M (approx.). This compares to $55.5M for CY21. Growth rate of >50% in difficult conditions globally.

2.     @Chagsy raised some very reasonable political and economic headwinds for FDV. FDV CEO Shaun Di Gregorio addressed some of these issues in questioning:

a.      Myanmar had a military coup in Feb 2021 and a State of Emergency continues. FDV’s property portal in Myanmar is trading at levels equal to prior to the coup.

b.     Trading in vehicles (and property to a lesser extent) continues through economic headwinds. In times when people are more desperate to sell they become more dependent on the dominant classified platform to sell their car and/or property.

The chart below illustrates FDV’s dominance in their key markets. With 50% forecast growth for this CY there was no suggestion of major slowdowns in their key markets.

FDV Latam and Asia have clear market dominance in the core classified business that supports growth through challenging global conditions.

July 2022 (1/2 year results)

Revenue up 36% over Q2 2021.

This is not the growth rate we have come to expect (ie 50% GAGR 2017 to 2021) however currency appreciation of 10% AUD:PKR has masked the underlying result.

Digging into the numbers shows revenue from the Pakistan held (not 100% held) entities (Zameen and PakWheels) increased by 60% and these two entities alone make up 32% of FDV revenue.

@Chagsy don't be too alarmed by the Sri Lanka, Myanmar, and Ghana based entities as they only comprise 4% of revenues.

FDV hold $30.8M in cash with no debt. There is a long runway for meaningful growth so I won't let myself get panicked by any short term volatility.

I will update my valuation following the full year results in December.

I have just read the FDV announcement regarding the buyout of the remaining 73.7% of Encuentra24 (E24).

I am a big fan of FDV with their strong and ongoing CAGR and have posted a bullish SP target.

The detail of this buyout has me concerned and I would appreciate any others thoughts.

FDV will buy OLX Group 36.2% stake for A$13.1M. This values E24 at A$36.18M.

The remaining 36.2% stake owned by founders will be bought via an undefined performance based earn out.

E24 3rd QTR annualised revenue was A$8.8M. 3rd QTR EBITDA A$184K.

The purchase is valued at 49 x annualised EBITDA???

The growth would need to be spectacular.

Appreciate others thoughts on this.