Friday 18 December 2015

Analysis of YNAP

YNAP, an Italian online retail chain

ISIN IT0003540470 | WKN A0YFBT

Business: An Italian headquartered online luxury retail chain. They have two different operations and those are: Multi-Brand Online Stores (with NET-A-PORTER.COM, MR PORTER.COM, THECORNER.COM, SHOESCRIBE.COM, YOOX.COM, and THE OUTNET.COM) and secondly they run Online Flagship Stores (they design and manages the online stores for luxury brands).

Active: With offices and operations in the US, Europe, Japan, China and Hong Kong. They deliver today in 180 countries and they have two million active customers.

P/E: 316

Comment: The South African Mr. Johann Rupert that owns 9% of equity and 50% of votes in the luxury holding company Richemont also these days owns 50% of this company. I assume the cooperation between Mr. Rupert and Mr. Marchetti (the CEO of YNAP and founder of YOOX) has worked out well the last couple of years.

This company was analysed due to a request via email. 

contrarian values of P/E, P/B, ROE as well as dividend for YNAP

The P/E of YNAP is awful with 316 and the P/B is not much better with 28 which gives a very clear no go from Graham. The earnings to sales are low with 3% and the ROE is surprisingly bad with only 8.7%. The book to debt ratio is low with its 0.5 which I also do not like very much.
They have however had a spectacular revenue growth rate in the last four years since it is up at 15.8% and this then gives us a motivated P/E of 35 to 40 which still means that YNAP is overvalued on the market.
They additionally do not pay out any dividend which I always never like.

Conclusion: Graham says no to YNAP and so do I because I simply do not see or know their advantage for the future. The P/E is too high, the P/B is too high, the ROE is too low and on top of that they do not not pay any dividend. I understand why Mr. Rupert is involved because he is using them but for me as an investor it is a double problem of will those luxury brands keep selling and if yes how long and for what reason should they keep doing it under the YNAP plattform and not somewhere else? I am not able to answer that and therefore it is also not for me.

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