Top candidate
1H23 RESULT
Need To Know
- In-line result, EBITDA $283.4m +13% on pcp
- FY23 EBITDA guidance unchanged, earnings heading to lower end
- Interim dividend 24cps, payment 5 April
Unusually, SEEK Asia provided the grunt in SEK’s result while the core Australian business strained under higher costs. The platform unification project grinds on but should eventually be very worthwhile.
ANZ EBITDA of $276m increased 8.5% on last year but was short of market expectations. The cost base was to blame, increasing 28% on an underlying basis, excluding $20m of spend on platform unification costs allocated to this segment. Job ad volumes increased 8% while yield increased 9% thanks to yet more depth revenue and premium ads.
SEEK Asia provided the highlight as revenue increased 25% (in constant currency terms) and EBITDA of $46.6m would have shocked the market. The encouraging element of the earnings beat here was the 22% yield lift while volume barely troubled the scorers at +1%. The yield increase was mainly due to depth revenue almost doubling and reaching 36% of total revenue. Good growth in premium and branded ads is also positive.
The Seek Growth Fund was valued at $2,254m at 31 December, up from $2,052m at last valuation.
Guidance. SEK has not changed its FY23 EBITDA guidance range ($560-590m) but is pointing towards the lower end as the likely outcome. Net profit guidance is similarly toned down to the lower end at approximately $250m.
Investment View
Yield growth remains the key story for SEK, and it is pleasing to see this factor standing out in the SEEK Asia result. Of concern to the market will be the rising cost base but much of this will fall away on completion of the platform unification program by the end of FY24.
The employment market in Australia is steering volumes to a more normal level as official unemployment lifts from a low level.
The long-term thesis is building nicely as shown by the SEEK Asia result. We know that customers are prepared to pay more for additional value (depth and premium products) so the innovation being embedded in the business will pay off. SEK has a commanding position in the ANZ market, and it is not unrealistic to think it can emulate this with SEEK Asia and in its LatAm markets in time.
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.
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