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Generic filters (ASX:KGN) share price soars 19% on strong HY24 result, dividend return

The Ltd (ASX: KGN) share price has jumped 19% as investors reacted positively to the FY24 first-half result.

Kogan is one of the leading e-commerce businesses in Australia as it aims to provide customers with good value.

FY24 first-half result

Here are some of the highlights from the first six months of the HY24 report:

  • Gross sales fell 5.6% to $446.6 million
  • Gross profit increased 42.2% to $89.5 million
  • Adjusted EBITDA was $21.5 million
  • EBIT (EBIT explained) increased 137.9% to $11.9 million
  • Net profit after tax (NPAT) grew 136.4% to $8.7 million
  • Earnings per share (EPS) rose 137.6% to $0.08
  • Interim dividend per share of $0.075

Breakdown of performance

The business has been working on transforming its business model, with platform-based sales increasing to 63% during the half. said revenue derived from platform-based sales represents “higher quality earnings for the business which is now more capital light, and with more recurring revenue than ever.”

‘Verticals’ revenue rose 25.6% year on year, with the company pointing to its mobile divisions in Australia and New Zealand, Kogan insurance and Kogan internet as drivers of that growth. During the half, Mighty Mobile was launched in New Zealand, which is the first vertical under the Mighty Ape brand.

Kogan First subscribers rose 15.3% year on year to more than 466,000 at 31 December 2023. This program delivered $22.7 million of revenue in the half, a rise of 109.7% year on year. Kogan First subscribers were responsible for around 62% of gross sales on the platform. They play in an important role for the share price.

The Kogan advertising platform added a new income stream for the business, delivering $1.3 million in revenue during the period which has received “great feedback” from marketplace sellers.

A reduction of inventory by 30.6% was in line with its strategy and helped the gross profit growth as it focuses on platform and software-based revenue. Total operational costs reduced 18.4%, which was helped by the “consolidation” of its logistics networks after the right-sizing of its inventory, the renegotiation of service contracts and efficiency gains across IT and hosting capabilities.

Outlook for the share price

The company said it made adjusted EBITDA of $4.9 million in January 2024.

In the second half of FY24, it’s expecting continued growth of the platform-based sales contribution, an improving gross margin and operating leverage, growth of its advertising platform, growth of Kogan First and maintenance of a strong balance sheet.

If the company can continue its momentum of rising profit margins, I think the company’s next few years could be very promising. Is today a good price? Time will tell, but it’s going in the right direction.

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At the time of publishing, Jaz does not have a financial or commercial interest in any of the companies mentioned.
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