CETTIRE LIMITED (CTT)
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31/10/2024

3

Downgrade to Hold from Buy

$2.00

57.48%

Bell Potter still believes Cettire will continue to outperform its peer group despite evidence of a 2Q slowdown in sales revealed during the release of 1Q results.

During Q1, revenue beat the broker's forecast, but adjusted earnings (EBITDA) were a miss. While the margin trends appear healthy at 5% exiting Q1, the analysts will wait to see delivered margins in the seasonally largest 2Q.

The $2.00 target is kept despite the broker's lower earnings forecast as the assumed risk-free rate falls as the upcoming easing cycle is factored in. The rating is downgraded to Hold from Buy on valuation.

FORECAST
Bell Potter forecasts a full year FY25 dividend of 0.00 cents and EPS of 4.50 cents.
Bell Potter forecasts a full year FY26 dividend of 0.00 cents and EPS of 5.80 cents.

04/11/2024

3

Hold

$1.38

8.66%

Cettire reported 1Q25 net revenue growth of 22% year-on-year and Petra Capital observes the quarter marks a slowdown compared to previous periods as the company prioritised profitability.

The broker notes delivered margin for the quarter declined to 17%, down from over 20% a year ago, impacted by increased promotional activity.

EBITDA at $2.0m is down significantly from $8.7m in 1Q24 but Petra highlights there's a slight improvement from $1.6m in 4Q24.

Cettire ended the quarter with $66m in net cash, up from $59m last year, and its corporate governance was strengthened with the addition of two independent directors, Petra observes.

Hold rating retained. The price target lifts to $1.38 from $1.15 due to "improved risk parameters".

FORECAST
Petra Capital forecasts a full year FY25 dividend of 0.00 cents and EPS of 5.20 cents.
Petra Capital forecasts a full year FY26 dividend of 0.00 cents and EPS of 7.00 cents.