Credit cards, homeloans..., page-15

My concern for KGN is whether they are executing a dIversification or diworsification strategy.

Acquisition of Petsure was one that left me perplexed.

Insurance business provide float, but the money brought in from pet insurance are Liability that needs to be paid back one day given animal's short lifespan (~2-6 years) and often then not, pet owners are always better off with insurance than not, meaning the Petsure will cover more than what the customer had paid until the end of life of the animal. Their insurance policy doesn't seems to reflect such risk to protect the provider.

Kogan seems to be increasing market share through multiple channel at a cost that cannot be easily quantified. The market seems to acknowledge such risk, hence the current price.

If Kogan can execute the diversification strategy right, the GST worry is not so much a concern anymore - Look, Kogan has huge room to grow internationally, domestically - mobile space, internet, insurance, white goods, credit card space. They are somewhat related, imagine they launch an after-pay financial service for customers, they can easily eat into the APT market domestically. 

In conclusion: The downside is pretty much all factored in at this price, the upside is asymmetrical.