Online marketplace Trade Me reported a no-surprises profit
for the year ended June, with a strong free cash flow and the
ability to both invest for growth and sustain a dividend,
Forsyth Barr broker Suzanne Kinnaird said.
The company said yesterday it had agreed to buy online
insurance comparison business LifeDirect, adding to its
purchase of inventory management company Tradevine and
holiday rental accommodation website Holiday Homes in the
Trade Me's operating earnings for the year were $123.5
million, up 15.8% on the previous corresponding period.
Reported profit was up 9.4% at $78.6 million. The total
dividend was 15.8c per share.
Total revenue was up 15.2% to $164.1 million, below the
Forsyth Barr forecast.
Ms Kinnaird said while the reported profit was only a modest
increase on her forecast, she normalised last year's result
down to $67.7 million for higher interest costs and reversing
the book gain on its Autobase investment. That showed a lift
in underlying profit of 16.3%.
''We like the medium-term outlook for Trade Me. However, it
is trading on full fundamentals and our recommendation is
hold,'' she said.
Trade Me chairman David Kirk said prospects for Trade Me's
continued success remained very good as it continued to
position for the future.
Chief executive Jon Macdonald said the purchase of LifeDirect
fitted well with core principles of connecting two parties to
undertake a transaction or form a relationship.
''LifeDirect is an excellent business with a strong team, has
a lot of potential for growth, and we think we can add a lot
of value as a source for new customers.''
More than 40% of all visits to Trade Me were now from mobile
devices and that relentless growth was driving a lot of the
technology team's activity, he said.
The company's prospects were bright but continued investment
was necessary, Mr Macdonald said.
''We expect to grow the top-line revenue and bottom-line
earnings, but these will reflect slower growth than we've
recorded this year while we focus on reinvestment in the