Company analysis group, RAAS Advisory has released an updated report on car subscription provider, Carly Holdings (CL8).
The research report follows a June quarter with subscription revenue up 83 per cent on the same period last year. To discuss the research findings, I’m joined by Research as a Service Director and Co-Author of the note, Finola Burke.
Thank you, Fouad.
So Finola, your report suggests Carly’s on track for continued fleet and revenue expansion. Tell us about your findings.
Carly has demonstrated that it can secure asset finance, deploy that finance and receive delivery of cars and get them on the road. They’ve now got a proven track record and we’re of the view that the company can continue to grow, both its car fleet and revenue expansion.
The growth in the fleet, which was up 285 per cent in owned vehicles in the June quarter and the high utilisation rate, which was 84 per cent again in the June quarter, so that they can get and keep vehicles on the road.
Now, in terms of growth Finola, how are Carly positioned for the quarter ahead?
Well, we think with the fleet size increasing and the consistent utilisation rate that this company has delivered over a number of quarters, now this points to building revenue growth. We’re forecasting that revenue will grow at a rate of 150 per cent in FY24.
And then in 2025, we’re looking for about 70 per cent growth from the company as it deploys its asset finance that it has in place now and pursues opportunities in the EV market and in the corporate space.
Your report has amended the base case valuation for Carly. What has driven the change in your assessment?
You are correct. Look, we did bring back our base case valuation, but this was largely due to the fact that the company had raised capital. So more shares on issue. We also have taken into account our risk-free rate. So what we apply to our valuation, the higher interest rates in the market. So we listed that from 3.5 per cent to 4 per cent.
The valuation itself is now 24.4 million from a base case perspective, which is 9.1 cents a share. But even more importantly, we also do a downside case and an upside case in the range that has narrowed quite a lot, particularly from the downside case perspective. Our downside case previously was 5.6 million or 2.70 cents a share. We’ve increased that to 16.1 million or 6 cents a share.