Seek Limited

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Seek Limited (ASX: SEK) is an Australia-based online employment services company that also offers marketing services, distribution services, employment training, and online education services for ready-to-run businesses. 

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~29.60% of the total shareholding. Pinnacle Investment Management Group Ltd and Bassat (Andrew Reuven) hold a maximum stake in the company at ~6.24% and ~3.88%, respectively.

1.4 Key Metrics: During FY22, the company reported a net margin of 21.6%, which increased from 13.7% in FY21. The asset turnover ratio in FY22 was 0.24x compared to 0.17x in FY21. Below is captured the trend of return on equity and current ratio since FY19:

Section 2: Business Updates, Financial and Operational Highlights

2.1 Recent Updates:

2.2 Insights of FY22: During FY22, SEK witnessed a surge in underlying EBITDA by 53% on a YoY basis to AUD 509.1mn. The company reported a dividend of 44 cents per share in FY22, which increased by 10% on a YoY basis. 

2.3 Strategic Progress: The company updated regarding its Platform Unification program, which is progressing towards completion by the end of FY24. SEK resumed its marketing activities in ANZ and launched a rebranding campaign on a broader scale across Asia. Additionally, the company has also completed the roll-out of a new contract and pricing structure in ANZ and also launched new bundled products, freemium model, and premium products across SEEK Asia.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is September 30, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 4: The report publishing date is as per the Pacific Time Zone. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavorable movement in the stock prices. 

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