Catch Group brokers kick off IPO marketing; big EBITDA jump forecast

Online retailer Catch Group's run at the ASX-boards is formally underway with its sponsor brokers sending detailed research reports to fund managers.

UBS analysts told clients Catch Group had about 1.5 per cent of the "fast-growing" online retail market (not including food) and 1.2 million active customers. 

The broker said Catch had $315 million sales, on a gross transaction value basis, in the 2018 financial year and $8.1 million in earnings before interest, tax, depreciation and amortisation. 

EBITDA was forecast to increase to $17.4 million next year. 

"We believe Catch can grow its share of online from ~1.5% to ~2.5% by our terminal year, with its marketplace offering (FY19: GTV $135m vs eBay Australia at $4-5b) driving ~80% of growth," UBS analysts, led by Jordan Rogers, told clients. 

"In our view, Catch will need to continue to expand its range, leverage its Catch Club subscription service (~85k customers), and keep its 'off-price' positioning to maintain repeat website valuation." 

UBS and Canaccord Genuity have been hired to run Catch Group's initial public offering. 

The company is expected to seek to raise more than $100 million for about a $200 million to $300 million market value. 

UBS expects Catch to report gross transactions up 30.9 per cent to $411.8 million in the 2019 financial year and net profit up from $2.9 million to $9.7 million. 

The numbers looked a bit different to Catch's accounts as filed with the corporate regulator. The accounts showed Catch Group lost $4.3 million in the 12 months ending June 2018, compared with a loss of $17.8 million in 2017, after writing down the value of Scoopon, which was sold to the Lux Group in 2017, and Pumpkin Patch, which was sold to Ezibuy last month.

While it is easy to understand the shift of retail dollars to online stores, fund managers are likely to focus on Amazon's impact on Australia's retailers and Catch Group. Fund managers are also expected to compare the company to the already-listed Kogan.com. 

Catch was founded in 2006 as CathcOfTheDay.com.au, a daily deals website, UBS told clients, and has broadened its offering to include everyday items. 

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