A Simply Fine Business!

I have spent some time in recent days conducting some research on CAR.

Intuitively, I knew that it was a good business, but it was only once I had finalised constructing a financial model for the company that it occurred to me just what a truly sensational business it is.


Some salient features follow:

1.  CAGR in Revenue of around 18%pa since listing:



.... translating into similar CAGR in NPAT (and because shares on issue have risen by just 5% over the past decade, CAGR in EPS is an astonishing 17%pa):



... and thanks to the capital-light nature of the business, it boasts ROE close to 45% and generates strong Free Cash Flow; with uncanny consistency and predictability:




In terms of any debate concerning whether or not the company's growth runway is close to being maxed out, I note that CAR today has two substantial revenue streams - namely, International and Financial Services businesses - which never existed when the company first listed.  And yet these two Revenue streams are today almost as large as the core Online Advertising and Data and Research Services businesses were at the time of listing.

Based on the company's precedent for innovation and monetisation of its growing IP, I'd say CAR will be able to keep growing at a rapid clip for years to come.


I would really like to own shares in the company, but I have been precluded from doing so for some time due to valuation concerns.  With the stock price having treaded water over the past 12 months, the earnings growth has chewed into the valuation metrics to some degree, leaving the stock trading on a prospective, FY2019 P/E of 22.5x and EV/EBITDA of 15x.

For a 45% ROE business growing organically at a rate of ~15%pa, those multiples appear almost attractive enough to present an entry opportunity.

If some extraneous event causes technology stocks to hit a speed wobble at some stage, CAR will be the first share I buy.