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Date : 04/01/2023

Kogan Shares Surged on Friday after announcing Brosa Acquisition

After announcing its purchase of Brosa, e-commerce company Kogan.com Ltd (ASX: KGN) has been in the spotlight due to the price of Kogan shares.

It has been said that before going into administration, Brosa was one of the leading online dealers of high-end furniture in Australia.

Kogan.com Ltd (ASX KGN) is an Australian e-commerce and services company listed on the Australian Securities Exchange. As an Australian consumer brand, Kogan.com is well-known for its digital efficacy and competitive rates. The company’s mission is to reduce prices and increase the availability of in-demand products and services.

Kogan Retail, Kogan Marketplace, Kogan Mobile, Kogan Internet, Kogan Insurance, Kogan Travel, Kogan Money, Kogan Cars, Kogan Energy, Dick Smith, Matt Blatt, and Mighty Ape are some of its retail and service brands.

So, let’s take a quick look at how Kogan shares are doing.

ASX KGN: FY22 Results

Kogan shares surged on Friday after the company announced the acquisition of Brosa. Kogan share price is trading at $3.50 and has a current market cap of $374.6 million.

ASX Kogan Shares Forecast from tradingview.com

  1. In FY22 ASX Kogan Share News, Kogan’s total revenue was $1.18 billion, up from FY21’s $1.179 billion. Kogan reported a 0.1% increase in revenue over FY21 & a CAGR of almost 23% from FY20 forward.
  2. In FY22, Kogan’s gross profit was $184 million, but in FY21, it was $203 million, a significant difference. In FY22, the firm saw a drop of more than 9.4% in its gross profit. Still, after FY20, the CAGR increased to above 20%.
  3. For FY22, the business had an adjusted EBITDA of $19.1 million.
  4. With a CAGR of 21% in FY22, Kogan.com’s number of Active Customers has risen to 3,972,000.
  5. Total cash and short-term investments were $31.2 million as of 30 June 2022, up from $12.8 million at the end of FY21.
  6. With $139,2 million stored and $21,9 million in transit, the total inventory was $161,1 million. At $227.9 million at the end of FY21, this is a significant drop in inventories.

 

KGN: Why are Kogan shares soaring again?

The Kogan share price increased on Thursday due to several factors.

The first is the IT industry’s robust performance this morning, which followed a very successful session on the NASDAQ index yesterday.

In addition, the announcement of Kogan’s new purchase may boost its KGN stock price.

A little over a week after going into administration, the business reportedly acquired Brosa, an online retailer of high-end furnishings. Due to this agreement, the furniture company will be able to continue operations and relaunch with the support of Kogan.

Kogan used its cash on hand to make the $1.5 million payment. In addition, it will aid the thousands of consumers still waiting for their items to arrive by providing logistical help.

As detailed in the press announcement, Kogan has acquired certain assets, including trademarks, customer loyalty, and shares. However, all leases and other obligations are not included in the purchase price.

 

KGN: A Brief Introduction to Brosa!

Brosa, founded in 2014, is a high-end luxury furnishings shop that has attracted over half a million users.

Its internet activities, helped by COVID tailwinds, helped the company earn $75 million in sales in the fiscal year 2022. However, it ran out of money soon. It was thrown into administration when the favourable winds died, and shoppers returned to traditional retailers.

Kogan paid just $1.5 million to acquire Brosa, even though the company had a valuation of over $60 million not too long ago and was supported by venture capital investors, including Bailador Technology Investments Ltd (ASX: BTI).

While this may seem like a steal on paper, the lack of interest from venture capitalists should be considered. The possibility of one failing online store purchasing another failing online store is also concerning. We’ll have to wait and see whether this is a formula for catastrophe or a stroke of genius.

 

KGN: Management Insights

David Shafer, Kogan’s COO and CFO, is optimistic about the purchase. To quote what he had to say:

By purchasing Brosa, Kogan will be able to provide a more comprehensive selection of furniture and home goods to its clients and provide unparalleled selection and value to Brosa’s existing clientele. We’re pleased to be able to save the Brosa brand and relaunch Brosa.com.au for our loyal consumers. Brosa is a well-known online furniture company in Australia. We are thrilled to have the brand join the Kogan Group after years of investment in brand-building and marketing.

 

Conclusion:

What is the forecast for KGN shares?

Our analysis shows that Kogan (ASX: KGN) has made an intelligent commercial move. Within the Kogan group of companies, Brosa now takes its place alongside Dick Smith, Mighty Ape, and Matt Blatt. It enhances the variety of brands that the organization offers. Suppose the company continues to bring in tens of millions of dollars in sales each year. In that case, purchasing KGN shares may be a good investment.

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