With spooky parallels to REA Group’s Asian quarry iProperty, shares in iCar Asia have had a stellar rails run on the back of similar takeover conjecture.
It’s easy to see why. The Malaysia-based car classifieds house is 34 per cent-owned by entrepreneur Patrick Groves’ Catcha Group, which owns 16.7 per cent of iProperty (IPP, $3.84).
While REA owns 22.7 per cent of iProperty, iCar has its own industry shareholder in the guise Carsales.com, which has upped its iCar stake to 20.2 per cent.
iCar has already attracted the tentative interest of China’s biggest car portal, Autohome.
With the Groves camp a willing seller to REA at the $4-a-share offer price for iProperty, is it willing to entertain a decent iCar offer as well?
We rated iCar a spec buy at 70c on September 19. Given iCar’s market position in Thailand, Indonesia and Malaysia, we see a takeout as (almost) inevitable and maintain the call.
iCar last week reported record third-quarter cash receipts of $1.63 million, up 146 per cent, and cash outflows of $2.93m.
While this indicates iCar is fast growing, it also shows that the company is a small fish in the capacious Asian pond. iCar has cash of $21m, “sufficient to take the company to break even by the fourth quarter of 2017’’.
Also keep an eye on LatAm, which is emulating iCar in six South American nations.
The Mike Fitzpatrick-backed LatAm last month pulled off a $20.2m capital raising at 31c a share, having raised $20m at 30c a pop in last December’s listing.
Ahead of the latest raising, co-founder Tim Handley likened LatAm to a mini Webmotors, Brazil’s leading site 30 per cent-owned by Carsales.
Webmotors is worth more than $300m on an enterprise value basis. “In terms of what our business will look like in four years’ time we use this as a proxy,’’ Handley said. “It’s comforting to know there’s someone in the region who has applied this business model successfully.’’
Buy.
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