|Shares Out. (in M):||43||P/E||0||0|
|Market Cap (in $M):||387||P/FCF||0||0|
|Net Debt (in $M):||-29||EBIT||0||0|
Unsurprisingly, online classified stocks have been huge outperformers. Rightmove in the UK has been a 10 bagger over the past 10 years and is now at 21.5x EV/EBITDA and 27x P/E. REA Group in Australia has been an eleven bagger over the past 10 years and is at 25.5x EV/EBITDA and 41x PE today.
We believe there exists an overlooked opportunity in this sector in Taiwan – AddCN (5287 TT). Instead of paying 30x+ P/E, AddCN is trading at 17x our estimate of 2018 P/E and is growing at the similar 10-15% rate of Rightmove and REA.
Founded in 2007, the company began as a pure-play internet platform selling virtual gaming items (e.g., if you want to trade an item for another which you need to advance in the game, this was a platform that enabled those types of transactions between gamers). In the subsequent years, the company ventured into real estate classifieds in 2007 which has now become the flagship enterprise and automobile classifieds in 2009 which is now a major growth driver. The company was listed on the Taiwan Stock Exchange in 2014 and remains one of the very few listed platform internet companies in Taiwan. Over the past 8 years, the company delivered a 4x EBIT increase, completely organically and with minimal capEx.
As of today, we believe ~60% of AddCN’s EBIT is in their real estate classified platform which along with the auto classifieds site is the part of the business we are most excited about. A key aspect of this business is the dominance the platform has in the rental segment (80-90% market share). This is leading the site to take market share in the for sale homes category as the rental platform gives the for sale platform a big traffic boost. The below has more detail on each segment. Note the job search site (12% of EBIT) we view as a competitive market and not a great business, the other ~90% of EBIT comes from either dominant platforms or platforms well on their way to becoming the dominant player in their category.