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A person offering to sell their vote had a top bid of $6.50 before Trade Me withdrew the listing. - Source: ONE News -
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Trade Me's forecast-beating results show the company is heading in the right direction, despite a share price drop, a market analyst says.
Michael Milne, an investment adviser from Craigs Investment Partners, told onenews.co.nz that Trade Me - as well as its investors - will be pleased.
"Net profit and earnings were both well ahead of their forecasts and investors will be pleased with the 7.8c dividend which is around 1c higher than expected," he said.
The company announced today that profit rose 8.4% to $75.6 million in the 12 months ended June 30 while sales increased 13.8% to $142 million.
But Trade Me shares recently traded at $3.80, a fall of 10 cents since the market opened this morning.
Milne said the market had already priced in a good result which would explain why its share price had not gained today.
"They need really to come out with something outstanding to surprise the market and gain further investor support".
The company has seen good gains since listing in December 2011 at $2.70 a share and Milne says the auction site's core business is still the stand-out performer, and other parts just need to build up speed.
"Some of the newer parts of the business such as their group-buying segment Treat Me perhaps need more time to gain momentum and reach their high expectations," said Milne.
Smooth transition
Trade Me chairman David Kirk says the online auction site has made a "smooth transition to life as a public company" after reporting pre-tax earnings of $110 million, up 5% up on forecast.
Kirk said the results were good to see given the variable economic conditions.
"We've delivered on the numbers set out in the IPO documents back in December and turned in another year of record profit," he said.
Kirk said the company is looking forward to issuing its first-ever dividend as listed company in September.
'No big surprises'
The company's CEO Jon Macdonald said there were varied levels of strength throughout the Trade Me business portfolio, but there were "no big surprises".
He said the core business, the general Trade Me marketplace, performed the way the company thought it would.
"Throughout the year, we've also seen the proportion of fixed price transactions continue to grow as buyers move toward new goods and an instant ecommerce experience," said Macdonald.
Trade Me Motors, Property, and Jobs, delivered a "strong performance", but other segments did not reach forecasts.
"First, our advertising business fell short of our revenue expectations. The online display advertising industry has been patchy, and we've seen the growth of international publishers at the expense of existing local players."
Milne agrees group buying site Treat Me did fall below expectation but he says Trade Me's core auction business is still the stand-out performer, and other parts just need to build up speed.
"Some of the newer parts of the business such as their group-buying segment Treat Me perhaps need more time to gain momentum and reach their high expectations," said Milne.
He also thinks Trade Me's decision to work with big retailers has been a successful move.
"The company's focus on expanding the offering of new goods (rather than second-hand) seems to be working well with well-known retailers such as Hallensteins, Glassons and The Warehouse now selling items through the Trade Me platform and they are also looking to facilitate supply from offshore retailers."
He said overall it is a great result.