Just Eat Share Discussion Threads

[undervaluedassets] 04/8/2015 09:48

I think that the growth is ok. . that is not the problem I have here

my Beef with this stock is What is to stop someone doing the same thing for less?

margins are substantial and competitors are bound to invade the space.

Amazon only have to flex a muscle and this business is over.

there is no moat to this business.

Others will come into the space - margins will get killed - then we will see if this business is worth 3 billion.

Goldman are pushing it cos they were involved in bringing the stock to market.

[asagi] 04/8/2015 09:40

Strong growth in the UK business continued in the period. Orders grew by 49% to 30.7 million (H1 2014: up 58% to 20.6 million) increasing revenues by 48% to £76.9 million (H1 2014: up 69% to £51.9 million).

those are pretty large declines in growth in the core UK market.

Asagi (short JE.)

[hpcg] 04/8/2015 08:20

Closed my short this morning as I have no idea where sentiment will go. There looks to be an upper cap on revenue forming based on 4 transactions per active user so there is the potential to work out a long term run rate.

[lennonsalive] 04/8/2015 07:20

Revenue up 54%, profits 9.4M.

Still overpriced, but wouldnt risk shorting or going long here.

[undervaluedassets] 03/8/2015 10:15

Worth more than Tullow oil . . .

[mike740] 24/7/2015 16:17

24 Jul 2015 Just Eat JE. Canaccord Genuity Buy 453.75 438.70 - 560.00 Reiterates

560p share price Target......

[lennonsalive] 20/7/2015 20:09

hairy, thank you for the insight.

[dangersimpson2] 20/7/2015 16:59

Given the 33x sales paid for menulog via equity raising I think what JPM meant say was that future M&A would be well recieved by the IB community ;-)

Seriously though when the market is mature and price elastic gains have to come from market share from competitors or from phone orders. The market is currently pricing in something like 40% organic cashflow growth i.e. w/o raising any furthr equity, for the next 10 years. If you believe the company to be fundamentally undervalued you have to believe they will generate higher than a 40% 10-yr CAGR. This is the bit I struggle to believe.

[hairy] 20/7/2015 14:04

Lennons - about 2 years when my son signed up with them, they took 11% of each order value. The terminal had to be paid for up-front - about £700 in those days. Consumables such as the paper spools are also paid for the restaurant. If you make a lot of price changes or other menu changes, JE charge for those also. Ordinarily and for initial set up, tbey don't charge. If the terminal gets damaged, JE made it very clear that this is the responsibility of the restaurant also.

If that all sounds negative, it is not meant to be but is illustrative of how little risk it is for JE.

The positives that my son was heavily influenced by were the power of JE's marketing. He was a startup and instantly got orders by virtue of that and this was business he wouldn't have got without JE. It is a key principle of JE business model that the customer is charged the same through orders placed with JE channel as if they phoned. Of course, there is no way this can be enforced.

I have seen some very misguided views on this business model from various postings since JE floated. Many including me might be surprised that many young folk love the convenience of being able to make the order transaction without the hassle of having to pick up the phone and their card is used securely if that is the preferred means of payment. Many smaller and mainly takeaway restaurants could never justify investing in a web presence and an online ordering portal and this kind of extra sales channel is why many probably sign up. Many restaurants in our area employ staff who can hardly speak any English so painful phone calls attempting to spell out what you want to order are largely avoided by this means of ordering. My son and many of his friends were and still are keen JE customers and they certainly had first mover advantage. HH is there as a competitor but firstmover and JE's hefty marketing spend means they are still winning and growing their international presence.

All of that said, I haven't yet been tempted to invest as the sky-high p/e carries a high price tag and any banana skins make them vulnerable. However, an interesting company to follow.

As a footnote, my son parted company with JE at their behest and this was after he'd been with them about 7 months. The reason is my son sold more drinks than food and JE made a unilateral decision to remove drinks dominated delivery companies from their portfolio before their IPO. JE were very quick to arrange for the terminal to be returned and the initial charge (the £700) to be refunded

[mike740] 20/7/2015 13:17

Technically seems we have a seller taking advantage of the spike this morning, but alls on track for the next level of resistance and the high for the stock.

[mike740] 20/7/2015 13:14

Think youl tend to find the average customer for this company is the stay at home drinker (plenty of those now, partys etc etc rather than going out) whos starving at the evenings end and doesnt give a toss about the extra charge and doesnt want to get done drink and driving to his/her local take away.

Got to remember some wont deliver over a certain distance, but when they sign up with JE. thats in the contract.

[mike740] 20/7/2015 13:11

Probably have to get the annual report for those details LL.

[lennonsalive] 20/7/2015 12:49

Does anybody know how much they coin in from an average takeaway?

Small takeaways how would this work?

Do they have to pay for the machine, website?

[4spiel] 20/7/2015 12:08

You are right danger. People can use JE when they are new to an area but if they find a good supplier they find out that you can get a better deal direct particularly if you pay cash. however not wishing to knock this - I am sure it increases turnover to restaurants and takeaways they might not otherwise have had if at lower margin and all going through the books !

[mike740] 20/7/2015 12:03

It expects the group's first-half results on 4 August to show that orders grew 42% year-on-year.

[mike740] 20/7/2015 12:02

JPMorgan Cazenove moved to an 'overweight' stance and introduced a 550p price target on the stock, saying the takeaway food website was its top pick in the European online space.

Following a period during under which it was unable to publish a rating, the bank said it had integrated the acquisition of Australia's Menulog into its estimates for the company, which lifted its 2016 EBITDA forecast by 20%.

JPM sees several potential catalysts for the stock. It expects the group's first-half results on 4 August to show that orders grew 42% year-on-year.

The bank pointed to the possibility of further M&A. "In our view, even in-fill M&A would show management active in consolidating positions and continuing to support long-term growth, and therefore is likely to be well received by the market."

[mike740] 20/7/2015 12:00

DS You dont appear to be pricing in international development and M@A action.

SEE BELOW.........

[dangersimpson2] 20/7/2015 11:48

Although it is a good business it is priced as if it has no real competition. They have got to no.1 by outspending on marketing however with my local takeaways I've noticed that Hungry House is now appearing higher on the google search page and seem to be providing bespoke websites for local takeaways with their own domain name but Hungry House back payment & back end. So they have real competition.

Now in a lot of industries you get supra-normal margins when you get a oligopoly and that maybe where these companies are going with their marketing land grab. However I think what is missing with this that although there may be only 2/3 successful online ordering companies in the end that doesn't mean that they can earn supra-margins because the takeaway industry as a whole is low margin so there is still competition from the phone line.

In my area there is a good chinese and a good indian within a 5 min walk or 3 min drive. I can get the menus online but I always phone in and pick up the food. It is useful if you go to an area you don't know or live far away from the takeaways however those are likely to be the least profitable business for the takeaways. So a takeaway with Just Eat/Hungry House etc. may generate higher revenue the just may not generate higher profits so will not accept higher margins.

In my experience having GS etc. positive on a stock is more indicative of a company that is likely to generate IB fees through M&A, or fund raising than strong future returns to existing equity holders!

[mike740] 20/7/2015 11:44

It forecasts a 2014-20 compound annual growth rate of 25% in sales and 41% in earnings before interest, tax, depreciation and amortisation.

[mike740] 20/7/2015 11:43

Just Eat gets a lift as Goldman Sachs reinstates 'buy' rating

Wed 15 July updated Mon 20 July 2015 11:18 | A A A

(ShareCast News) - Goldman Sachs reinstated its 'buy' rating on Just Eat and added the shares to its Conviction List, with a 560p price target.

It said that in addition to rapid growth potential as more takeaway food is ordered online, network effects and platform scalability should drive strong profitability as established markets mature and losses decline in other markets.

"The business is highly cash generative, with low capital requirements and negative working capital," said GS.

"As market leader in 12 of its 15 countries, Just Eat should benefit as online penetration increases."

It forecasts a 2014-20 compound annual growth rate of 25% in sales and 41% in earnings before interest, tax, depreciation and amortisation.

Goldman sees recently acquired Australia/New Zealand as a key catalyst for improving profitability and expect its EBITDA margin to reach current UK levels in 2017 from 9% currently.

Key risks to the investment case include disruptive action by competitors, market share losses, and lower-than-expected penetration of internet ordering.

[hpcg] 20/7/2015 10:23

Asagi - I agree with your stance entirely; the profit take is a killer. One of three things have to give:

1. The price to the customer through the JE app must be higher.
2. The cost to the outlet charged by JE must come down.
3. The outlets has to stop using JE.

However, a big push from GS and a trend heading up is not a force I want to compete with.

[mike740] 20/7/2015 10:22

Goldman Sachs reckons savvy investors could make another 28% profit.

[asagi] 20/7/2015 09:46

"Just Eat's U.K. Success Threatened By Google, Amazon"

Nick Batram, an analyst at Peel Hunt Research in London, said Just Eat’s valuation allows for very few if any obstacles such as a slight slowdown in business or pressure on margins.
"Just Eat were in very early to this model," Batram said. "At the moment it’s a business model that dominates online takeaway, but that won’t be the case in three to five years’ time."



Asagi (short JE.)

[asagi] 20/7/2015 09:43

it's worse than that. That percentage charged by Just Eat works out as a huge part of a takeaway's gross profit. The motivation to quit, change marketplace or develop your own app is huge.

Not nice being short though...

Asagi (short JE.)

[mike740] 20/7/2015 08:31

Goldman Sachs.....


Clearly, Just Eat needs an impressive tech offering to distinguish it from the pack, but as cheaper smartphones become available across the world, mobile is set to become its most important channel. In 2014, UK mobile traffic increased 61%, with orders jumping by 58%. The business generates a lot of cash - the £58 million expected in 2015 should grow to £135 million in 2017 - which will be important for investment in this area, although it is likely to go on a buying spree.