Trade Me beats forecasts, seeks new markets

Recently listed Trade Me beat several guidance expectations, including that of revenue in its initial public offering prospectus, to deliver an after tax profit of $36.4 million.

Wellington-based Trade Me is now looking at dormant retailers and smart-phone technology as a way to tap into new markets, having beaten the first-half earnings forecast in its offer documents, The New Zealand Herald reported.

In early January, Trade Me shares first pushed through the $3 per share barrier and hit a high of $3.03 at the time - more than 12% above the issue price.

Trade Me shares fell 0.6% to $3.14 yesterday.

The initial public offering raised $363.5 million for Trade Me's owner, Australia's Fairfax Media, which retains a 66% stake in the online auction host.

Craigs Investment partners broker Peter McIntyre said the company's revenue at $70 million was up slightly on both the prospectus guidance and Craigs' forecast of $69.6 million, with classifieds slightly up and other revenue slightly down - compared with $61.8 million revenue during the previous first half in 2011 - a 13.2% increase.

"Trade Me posted a solid first-half 2012 result, in line with expectations," Mr McIntyre said.

Forsyth Barr broker Suzanne Kinnaird said the core general items business was in line with expectations and divisional revenue was up 6.2% on the same period last year.

While the classifieds section of property, motors and jobs was slightly better than expected, up 16.2%, revenue from advertising, travel, dating and Treat Me was slightly below expectations due to weaker than expected growth in display advertising - but still up 27.4% from the same period last year, she said.

Mr McIntyre said Trade Me's after-tax profit, at $36.4 million, beat Craigs' estimate of $35.1 million, as did its earnings before interest, tax, depreciation and amortisation (ebitda) booked at $51.7 million against an expectation of $50.7 million.

Trade Me said yesterday it was working with several parties who were helping integrate retailers on to its online platform as it seeks to boost the sale of new goods over the website.

Chief executive Jon Macdonald said new goods sales, which make up 40% of items sold, was a growth area for the company.

Trade Me was also targeting smart-phone applications as a means to encourage consumer demand for its services.

Trade Me revenue was expected to remain stable and in line with prospectus forecasts, as are costs.

Earnings and dividend guidance was also unchanged from the prospectus, with second-half 2012 ebitda at $54.5 million and first half 2013 at $56.3 million.