Skip to main content
EquitiesRetail

Cettire Limited (CTT): Leveraging on luxury e-comm opportunity

Revisiting Cettire’s fulfilment and returns policy

We have revisited Cettire (CTT)’s fulfilment and returns policy including the latest customer reviews in comparison to luxury e-commerce peers since our last assessment in Nov-22. We view overall fulfilment currently in place at CTT as in line with broader complexities associated with cross-border e-commerce as evident to us from discussions with industry specialists. In terms of CTT’s customer reviews with the majority associated with the returns policy, we note that overall ratings have remained relatively unchanged on a much larger base in total reviews in line with the growing size of the business but broadly within the range of its peers. While CTT remains a younger company as compared to luxury e-comm peers, the company continues to prioritise investing into technology solutions & customer service to improve the returns experience related to first time customers.

Earnings changes and 3Q24 preview

We make no changes to our forecasts as our revenue drivers and margin assumptions remain unchanged. CTT last updated the market in Feb-24 at the 1H24 result reporting that sales revenue was +80% on pcp for the month of January. Our 3Q/2H24 forecasts factor in the strong comparable period and see sales revenue growth of ~66% on pcp driven by both core and emerging markets. Our EBITDA margin assumptions reflect the usual seasonality of margins in 2H. We look for updates on the company’s China launch with market entry imminent.

Investment View: PT unchanged at A$4.80, Maintain BUY

Our estimates and PT remain unchanged. Our A$4.80 PT is based on an equally weighted DCF (WACC 12.6% TGR 3.5%) and relative valuation (utilising a target EV/EBITDA multiple of 15x on a FY25e basis). We think CTT’s ability to outperform their peer group far outweighs others given the ~0.9% market share and further supported by the ongoing consolidation in the luxury e-commerce market. We also view CTT’s current EBITDA margins ahead of other e-commerce players with minimum risk associated with the drop-ship inventory model. We retain our BUY rating.

To read the full report click the button below.

View Detailed Report
Authored by Chami Ratnapala – Analyst – at Bell Potter Securities, 18 March 2024
Important Disclaimer—This may affect your legal rights: Because this document has been prepared without consideration of any specific client’s financial situation, particular needs and investment objectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement with Bell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell Potter Securities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate. Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document. This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. In the USA and the UK this research is only for institutional investors. It is not for release, publication or distribution in whole or in part to any persons in the two specified countries. This is general investment advice only and does not constitute advice to any person.
Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in this commission. Bell Potter Securities and its associates may hold shares in the companies recommended.