No slacking
ANNUAL MEETING UPDATE
Need To Know
- FY23 EBITDA guidance reaffirmed $560-590m
- Will reduce costs if necessary
- Job ads are moderately below June/July levels
Reaffirmation of SEK’s FY23 earnings guidance at the Annual General Meeting should be well received by investors.
Guidance commentary has been modified. SEK says guidance is based on AUS/NZ job ad volumes continuing to moderate slightly. This is a more realistic outlook than the previous statement expecting volumes to remain steady.
SEK noted that job ads are ‘moderately below’ June/July levels, implying that the October data (-10% below July) was slightly misleading.
Costs can be managed. SEK said it will look to manage its on-going cost base to reflect the environment. The AUS/NZ cost base increased $70m in FY22, excluding platform unification spend, and this can be wound back if job ad volumes soften further. The three-year platform unification spend across FY22-24f will invest $65m in FY23.
Investment Implications
Clarification of the parameters that drive guidance is a welcome confidence boost for investors. The low end of guidance at $560 million EBITDA is a 10% increase over FY22 which would be a good outcome considering the additional platform unification spending.
The macro environment for the dominant AUS/NZ segment is easing after a period of strength, although there may be pockets of good activity where sectors of the economy have structural shortages, or if rising immigration becomes material.
SEK remains undervalued on a long term basis. Customers are prepared to pay more for additional value as demonstrated by the excellent growth in premium depth products.
SEK continues to generate very good returns on the extensive investment made in its platforms and products. The platform unification program will give its Asian businesses a significant leg up in replicating the success in AUS/NZ.
Stock overview
Share Price
Company overview
SEEK is Australia’s leading online employment marketplace. It has similar platform investments in Asia, China, Brazil and Mexico.
Disclaimers and Disclosures
Issuer
The information and opinions contained within Sandstone Insights Research were prepared by MST Financial Services Pty Ltd (ABN 54 617 475 180, AFSL 500557) ("MST").
Reliance
Whilst MST make every effort to use reliable, comprehensive information in the construction of its reports, MST make no representation, warranty or undertaking of the accuracy, timeliness or completeness of information in this report. Save for any statutory liability that cannot be excluded, MST and MST employees, representative and agents shall not be liable (whether in negligence or otherwise) for any error or inaccuracy in, or omission from, this advice or any resulting loss suffered by the recipient or any other person.
General Advice
Any advice contained within Sandstone Insights Research is general advice only and has been prepared without taking into account any person’s objectives, financial situation or needs. Any person, before acting on any advice contained within Sandstone Insights Research, should first consider consulting with a financial adviser to assess whether that advice is appropriate for their objectives, financial situation and needs.
General Disclosures
This report should be read in conjunction with MST Disclaimers and Disclosures and is published in accordance with MST Conflict Management Policy which are available on the MST website: https://www.sandstoneinsights.com.au.
Currency of Research
The recommendations made in a Sandstone Insights Research report are current as of the publication date. If you are reading a report materially after publication, it is likely that circumstances will have changed and at least some aspects of the analysis may no longer hold.
Access and Use
Any access to or use of Sandstone Insights Research is subject to the Terms of Use. By accessing or using Sandstone Insights Research you hereby agree to be bound by our Terms and Conditions and hereby liable for any monies due in payment of accessing this service. In addition you consent to us collecting and using your personal data (including cookies) in accordance with MST Privacy Policy, including for the purpose of a) setting your preferences and b) collecting readership data so MST may deliver an improved and personalised service to you. If you do not agree to MST Terms of Use and/or if you do not wish to consent to MST use of your personal data, please do not access this service.
Equities Research Methodology
Please click here for information about MST equities research methodology.
Related Reports
Stateside
CAR made a presentation on its US business, Trader Interactive (TI) detailing the growth opportunity.
One eye on AI
A much improved second half year saved News Corporation’s blushes to the point where the share price has overcompensated, in our view. We lower our recommendation to Sell.
Below reserve
Domain’s trading update did not contain any positive short term news. However, the residential property market, on which its earnings depend, is exhibiting signs of improvement that will support an earnings jump in FY24f for DHG.