The company will acquire Mocka, a vertical online retailer of affordable homewares and furniture. While the multiple is not cheap, Morgans notes it is rare to acquire an online business that is profitable and light on capital expenditure.
The broker assumes accretion of 9% in FY20 and 15% in FY21.Morgans believes earnings upside and a PE expansion are likely over time and the stock can outperform. Add rating maintained. Target rises to $2.42 from $1.93.
Target price is $2.42.Current Price is $2.32. Difference: $0.10 – (brackets indicate current price is over target). If ADH meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges – negative figures indicate an expected loss).