After changing its valuation model, Vostok New Ventures says the value of Avito is up $ 1.1 billion since 2016. The Russian classifieds business is now valued at $4.5 billion, according to Vostok’s Q4 report.
In the report, released Wednesday, Vostok CEO Per Brilioth (LinkedIn profile) says Avito’s new valuation isn’t an aggressive number since the company is on the route to making $300 million in EBITDA some years out.
The report also includes a detailed description of the real estate market, valuing Avito’s real estate verticals at $1.5 billion. Brilioth shares insights around Avito’s new valuation and how it compares to its peers.
“The refined valuation model of Avito better reflects the company’s revenue earnings and entails revenue growth of 25-35 percent at consistently high margins,” Brilioth writes, comparing Avito to where Rightmove was in 2007. “At the end of the day, what matters for valuation are earnings and our new mark for Avito captures that.”
Vostok New Venture owns 13.2 percent of Avito, a holding which stands for more than 60 percent of the total value of the Swedish listed investment company. The revaluation of Avito adds another 9 percent to the fair value of the Vostok New Ventures share, giving it a fair value of SEK 85,65. The company was trading at around SEK 68, up 5 percent, early Wednesday.
Vostok New Ventures gives specific numbers for Avito in its Q4 report:
- In Q4 2017, Avito had revenues of RUB 4,241 mln ($73.6 million), up 29 percent compared with the fourth quarter of 2016.
- Adjusted EBITDA margin of 53 percent or RUB 2,232 mln ($38.7 million), compared with the fourth quarter of 2016 (Adjusted EBITDA margin of 47 percent or RUB 1,536 mln).
- Listers amounted to 12.2 million and grew by 8 percent compared to 11.3 mln for the same period the previous year.
Vostok’s other classifieds businesses
The report wasn’t as positive for some of the other classifieds holdings in Vostok New Ventures’ portfolio.
Merro, an online marketplace investment company, dropped 24 percent in value. Merro owns Opensooq as its main holding but also owns shares in DubiCars, PropertyFinder, the technology company CloudSight, Yta.se, TippTapp, and QuintoAndar in Brazil. Vostok owns 22.5 percent of Mero which is now valued at $9.4 million.
The valuation was done as a sum of the parts. Although Opensooq was revalued behind the drop Opensooq is still considered to be “on a clear path to becoming the Avito of the MENA region”.
The Vostok investment in Propertyfinder saw a value development of 44 percent for the year. Vostok owns 10 percent of the property site which is valued at $28.7 million. Propertyfinder operates real estate platforms in seven countries across the MENA region. Page views for the site were up 38.3 percent while unique browsers were up 38.3 percent. This valuation is done on the basis of an EV/Sales peer multiples.
The biggest revaluation in percentage for Vostok is the 17 percent the Swedish Investment company owns in Wuzzuf — the valuation of which increased by 68 percent. Vostok values the Egyptian leading job vertical to $ 13.8 million. The company is expected to perform equally well in 2018.
Wuzzuf also runs the blue collar site Forasna, a successful product, “that has a potential far beyond the borders of Egypt and with very little competition,” according to Vostok.