Etsy, Inc.

ETSY Details

Etsy, Inc. (NASDAQ: ETSY) operates two-sided online marketplaces connecting buyers and sellers globally. Its online marketplaces are Etsy.com and Reverb.com. As of June 30, 2021, ETSY connected 5.23 million active sellers and 90.49 million active buyers worldwide. Its revenues are categorized into 1) Marketplace revenue, which refers to fees levied on sellers for listing their products on its platform, and 2) Service revenue, including revenue earned through optional services (on-site advertisement and shipping labels).

Achieving Inorganic Growth via Horizontal Acquisition: On July 13, 2021, ETSY acquired Depop Limited, an online global fashion resale marketplace, for ~USD 1.63 billion in cash plus unvested equity. This acquisition furthers Etsy's prospects in the high-frequency apparel sector. This news follows the acquisition of Elo7, a marketplace for unique handmade items in Brazil, for USD 217 million on July 02, 2021.

USD 1.0 Billion Notes Offering: On June 09, 2021, ETSY priced a private offering of USD 1.0 billion aggregate principal amount of 0.25% convertible senior notes due 2028 to qualified institutional buyers. At the company's discretion, the notes can be redeemed for cash, shares, or a combination of both from June 20, 2025, at an initial conversion rate is 4.0518 Class A common shares per USD 1,000 principal amount of notes. The proceeds will be used to pay capped call transactions costs and for general working capital purposes.

Q2FY21 Results: The company reported a growth of 24.36% in total revenue to USD 528.90 million in Q2FY21 (ended June 30, 2021) compared to USD 428.74 million in Q2FY20, owing to a 19.10% YoY improvement in its Marketplace revenue, which represented 74.77% of the total revenue in Q2FY21, and a 37.98% YoY growth in the Services revenue. ETSY reported a decline of 7.41% in adjusted EBITDA to USD 139.47 million in Q2FY21 vs. USD 150.63 million in Q2FY20. Net income rose to USD 98.25 million in Q2FY21 from USD 96.43 million in Q2FY20. As of June 30, 2021, ETSY had cash & cash equivalents (including short-term investments) of USD 2.48 billion and total debt of USD 2.32 billion.

GMS, Revenue, and Adjusted EBITDA (USD million) (Source: Q2FY21 Investor Presentation, August 04, 2021)

Key Risks: ETSY operates in the e-commerce industry and faces direct competition from established players like Amazon, eBay, and Alibaba, which could undermine the company's business interests. Furthermore, Google Cloud accounts for most of the data processing, networking, and other service requirements of Etsy.com. Therefore, any disruption in the services of google cloud could adversely impact its operations.

Outlook:

Encouraging Outlook (Source: Q2FY21 Investor Presentation, August 04, 2021)

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

 (Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

ETSY Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: ETSY stock price has decreased by 15.00% past six months and is currently trading in the mid-band of its 52-week range of USD 103.06 to USD 251.86. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 46.97. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 220.21. Considering the correction in the stock price, recent acquisitions, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 187.71, down 7.12% as of August 05, 2021, at 12:57 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached. 

Seanergy Maritime Holdings Corp.

SHIP Details

Seanergy Maritime Holdings Corp. (NASDAQ: SHIP) is an international shipping company engaged in marine transportation of dry bulk commodities globally, primarily iron ore and coal. It owns a fleet of sixteen Capesize vessels, with a combined cargo-carrying capacity of 2.83 million deadweight tonnages (dwt) and an average fleet age of 11.4 years. As of August 05, 2021, the company's market capitalization stood at USD 164.76 million.

Fleet Expansion: On July 27, 2021, SHIP announced the delivery of a 2009 built Capesize vessel M/V Friendship having a capacity of 176.95 million dwt, partially funded by a USD 13.0 million loan facility. This acquisition marks the fifth Capesize delivery in FY21. In addition, the company fixed the Time Charter (T/C) for the new vessel for a term of 17 – 24 months with NYK Line, a leading Japanese company.

Signing Key Commercial Agreements: On July 14, 2021, SHIP signed a T/C agreement for its M/V Worldship vessel with a US-based commodity trading company at a gross daily rate of USD 31,750 for 12 – 16 months. It also concluded a USD 30.9 million financing at LIBOR + 3.5% interest rate for chartering back its 2012 built Capesize M/V Hellasship and 2010 built M/V Patriotship vessels.

Q2FY21 Results: The company reported a surge of 207.81% in vessel revenue, net to USD 27.83 million for Q2FY21 (ended June 30, 2021) compared to USD 9.04 million in Q2FY20, primarily due to an increase in current charter rates and the acquisition of four new vessels in 2021. SHIP reported adjusted EBITDA of USD 11.29 million in Q2FY21 vs. USD (1.85) million in Q2FY20. Net income was USD 1.96 million in Q2FY21, in contrast to a net loss of USD 11.29 million in Q2FY20. As of June 30, 2021, the company had a cash balance (including term deposits and restricted cash) of USD 56.39 million and total debt of USD 220.03 million.

Key Risks: Fuel accounts for most of SHIP's operating expenses, pricing of which is highly volatile and unpredictable. Any lag in the supply of requisite quantity or unfavorable pricing could distort the company's overall performance. In addition, SHIP's prospects rely only on the transportation of dry bulk materials, and its fleet comprises only Capesize vessels. Consequently, any downturn in charter demand for such commodities could impair the financials of the company. 

Outlook: In its Q2FY21 Report, the company stated that it has fixed ~94% of the fleet expected operating days in Q3FY21 at an average Time Charter Equivalent (TCE) of USD 28,880 per day, which is 63% higher than H1FY21.

Operating days and TCE (Source: Q2FY21 Earnings Release, July 29, 2021)

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

 (Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

SHIP Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: SHIP stock price has decreased by 14.52% in the past six months and is currently leaning towards the lower band of the 52-week range of USD 0.39 to USD 2.45. The stock is currently trading close to its 50 and 200 DMA levels, and its RSI Index is at 36.13. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 1.16. Considering the correction in the stock price, fleet expansion, and current valuation, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 0.97, down 0.35% as of August 05, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Disclaimer

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