This report is an updated version of the report published on 19 November 2024 at 5:10 PM AEDT.

SEEK Limited (ASX: SEK)

SEK is an Australian online employment marketplace. SEK operates a range of other businesses, including SEEK Learning, which helps connect people with education opportunities; SEEK Business, where businesses and franchises can be sold, and SEEK Volunteer, which is an Australia’s source of volunteer opportunities

Recommendation Rationale – SELL at AUD 26.44

• Financial Highlights: SEK’s revenue declined by 6% YoY, falling to AUD 1,084.1mn in FY24 from AUD 1,157.9mn in FY23, primarily due to lower volumes during the period. The company’s EBITDA decreased by nearly 14% YoY, dropping to AUD 468.9mn in FY24 from AUD 546.0mn in FY23. Additionally, adjusted NPAT fell by 33% YoY, reaching AUD 177.4mn in FY24 compared to AUD 265.5mn in FY23.
• Trading Near the Resistance: SEK’s share price is trading near to its R1 level recommended on 25 September 2024. Therefore, share price can face resistance at the current levels.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/Sales EV/EBITDA, Price/Cash Flow, Price/Earnings, Price/Book) are higher than the median of Communication Services’ industry.
• Market Risk: SEK operates in a highly competitive market, which can affect its market share and profitability. Additionally, rapid advancements in technology require continuous innovation and adaptation.

SEK’s Daily Price Chart

Valuation Methodology: EV/Sales Approach (FY June'25E) (Illustrative)

The stock is expected to trade at discount based on decrease in revenue, decline in reported NPAT, Asia paid Ad volume drop, and reduction in ad volumes in FY24. For conducting the valuation, the following peers have been considered: REA Group Ltd (ASX: REA), CAR Group Ltd (ASX: CAR), Domain Holdings Australia Ltd (ASX: DHG), and other have been considered.

Considering that the stock is trading near to its R1 level, current trading levels, and risks associated, the share price can face consolidation at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the closing market price of AUD 26.44, as of 19 November 2024.

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

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 19 November 2024. 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.

Note 4: Dividend Yield may vary as per the stock price movement.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and 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 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 unfavourable movement in the stock prices.