+ Book sales rose 22% in FY18. YVEN added seven book publishers to its suite of products in FY18, from just a single publisher when it was listed in 2017. The relationship and commerciality of these new publishers will require some time to mature, especially the ability to select the choicest titles. Therefore, inventory will be sub-optimal and may require a gestation period of 1 to 2 years.
+ Faire Leather is performing well. This new leather products brand that was launched on Kickstarter in December 2017 is now being distributed in Taiwan, China and Europe.
– Margins collapsed in FY18.
– An external independent review. YVEN has been required to undertake an external review of its internal controls, which is estimated to cost the Group a five-figure sum.
YVEN was pursuing several initiatives and projects to expand its non-books category in 2018. The outcome was less than favourable. The new focus will be to use crowdfunding platforms to launch products, monetise their data analytics capabilities through services and release more differentiated non-book products with a more cost-effective route to market.
What did not work:
Maintain BUY with a lower TP of S$0.16 (previously S$0.61)
We lowered FY19e earnings to marginal profitability. Any turnaround in profits is earmarked in FY20e. Our target price is based off FY20e earnings and a PE multiple of 30x. This PE multiple was derived via a benchmark against other e-retailer comparables.