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iCar Asia Ltd surges 10% on record revenues: Is it too late to buy?

What? iCar Asia Ltd (ASX: ICQ) on Tuesday morning delivered a quarterly result that blew away the expectations of analysts and saw the share price jump by 10% in early trade against a 1% rise in the broader market.

What Happened? iCar continued its terrific momentum from the 2014 calendar year by reporting new record highs in essentially every metric. Here is the summary of all the records highlighted in the announcement:

  • Record quarterly cash collections of $1.4 million
  • A record combined monthly audience 7.6 million unique car buyers visiting iCar Asia sites in March 2015.
  • A record combined 800,000+ unique car buyers sent leads to car sellers during March
  • A record number of car dealers logging into the company’s Response Management System (RMS)

iCar’s announcement follows hot on the heels of sister company iProperty Group Ltd (ASX: IPP), which reported equally impressive statistics earlier in April. The companies, which were both founded by Asian entrepreneur Patrick Grove and have major Australian shareholders are attempting to dominate the car and real estate classified markets in Malaysia, Indonesia, and Thailand.

What Now? It’s certainly not too late to buy iCar Asia, in my opinion. iCar’s share price remains well below the high of $1.88 hit in mid-2014, regardless of the fact that profitability and positive cashflow milestones are taking a little longer to hit than expected at that time.

The group holds the number one position in all of its markets and now faces the challenge of increasingly converting that dominance into revenue and profits. So far iCar’s management and advisers from Carsales.com Limited (ASX: CRZ) appear to be doing a great job and I’m going to back them to make it happen.

The only downside is that if we see a significant market correction, iCar could suffer because it’s yet to turn a profit and any future capital raising at a lower price would be dilutive to existing shareholders.

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Motley Fool contributor Andrew Mudie owns shares of iCarAsia Limited. You can find Andrew on Twitter @andrewmudie

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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