News Alert : FY24 GMV and adjusted EBITDA guidance below market expectations
- GMV grew by 1% to HK$8.39bn in FY23, at low end of guided range of 1-5% growth
- FY24 GMV and adjusted EBITDA guidance c.6% and 50% below market expectations
- Expect near-term share price pressure due to weaker FY24 guidance
FY23 GMV fell within the low end of the target; guiding 5-10% GMV growth for FY24. HKTV announced its FY23 operating statistics and FY24 business outlook yesterday after HK market close. FY23 GMV grew 1% y-o-y to HK$8.39bn in FY23, within the guided range of 1%-5% growth. The number of unique customers who made purchases at HKTVmall and Wet Market Express increased by 7% y-o-y to 1.5m in 2023. In 2H23, GMV increased by 7% y-o-y, reflecting normalised growth. The company guided for a HK$8.7-9.1bn GMV target for FY24, indicating 5-10% y-o-y growth. They also guided adjusted EBITDA margin at c.2.6-3.0%, translating into c.HK$226-273m, or 9-19% y-o-y decline. This is c.50% below market expectations. By segment, the company guided for HK$0.2-0.26bn GMV for Wet Market Express and an adjusted EBITDA loss of c.HK$43-49.0m. The company will continue to invest in new venture projects (e.g., Fully Automated Retail Store) with projected adjusted EBITDA loss of c.HK$125m in FY24.
Weaker-than-expected FY24 guidance. The FY24 GMV and adjusted EBITDA growth were c.6% and 50% below the current market expectations, respectively. Management remained relatively cautious about the HK retail outlook in FY24, given the slow economic recovery and shift of purchasing power to beyond Hong Kong. The FY24 adjusted EBITDA guidance suggests a y-o-y decline, mainly due to increased investment into new venture projects and Wet Market Express. The organic e-commerce business’s operating guidance remains satisfactory, with the commission rate guidance staying stable at 22-22.5% and projected adjusted EBITDA at c.HK$380m for FY24. The company remains the key beneficiary of the rising demand for online purchases in HK. The stock trades at a c.0.5x FY24F PS, 1.5SD below the historical average. Our rating and TP are currently under review.