The Camplify Holdings Ltd (ASX: CHL) share price has been a high flyer over the past 6 months. During this time, shares in the peer-to-peer digital marketplace for recreational vehicle (RV) owners and hirers have skyrocketed 150% to $3.50 per share.
After already delivering such strong returns since the company listed on the ASX in June, spectators might be wondering if there's still potential upside in the Camplify story.
Yesterday, Motley Fool Australia analyst Benny Ou joined our chief investment officer Scott Phillips to explore the buy case for Camplify. The coverage was part of The Motley Fool Australia's 'Stock of the Week' series on YouTube.
At the time of writing, shares in Camplify are trading 5.14% higher to $3.68. This puts the company's share price approximately 27% below its 52-week high.
Camplify is a small-cap company with a market capitalisation of ~$117 million. Despite its small size, Benny Ou compares the ASX-listed marketplace to online rental giant, Airbnb Inc (NASDAQ: ABNB). A company that is roughly a thousand times larger in value than Camplify.
ASX-listed Camplify offers a solution to a problem
Going camping — it's a great way to get away from it all and spend time with friends and family. For those that like to do one better than a tent, a caravan or campervan are the go-to options. However, these can cost tens of thousands of dollars — making for a significant barrier to ownership, and it makes it hard to justify if it sits unused for the majority of the time.
That's where Camplify comes in… the company founded by Justin Hales offers a marketplace for RV rentals. This allows people to hire an RV on simple per-day pricing terms. Conversely, it provides a way for RV owners to make use of their underutilised RVs by renting them out.
While the RV rental business has been done before, Benny points out that ASX-listed Camplify has a key point of differentiation.
Ou says:
It has a digital platform, but it's also capital light. By having this digital platform or sharing platform, it doesn't require the cost to build or own these RVs. It doesn't require or need to maintain rental locations, and you don't need staff to actually be at these premises. This is in contrast to the traditional players, where they are very capital intensive.
Much like Airbnb, this business model delivers high levels of gross profit, which can be lucrative in the long term. Also in a similar fashion to Airbnb, Ou believes Camplify will benefit from network effects. As more RV owners join the platform, more hirers will be enticed by the broader selection. This is a large reason why Airbnb has successfully grown from two hosts in 2007 to 4 million hosts at present.
A reopening play
International travel is still yet to kick back into gear due to the lingering cases of COVID-19. However, this might bode well for a strong rebound in domestic tourism. Australians might be more prone to exploring the landscape on the doorstep via an RV as we are relinquished from local restrictions.
On this note, Ou highlighted the potential for ASX-listed Camplify, stating:
What we will be seeing is a lot of Australians spending a lot of their money domestically. We've heard there are about 200 billion dollars stockpiled by Australians that would have been spent overseas that's going to obviously remain and spent domestically… domestic travel is still below the pre-COVID levels, so that leaves another runway of growth for it to go back to pre-COVID.
The company's ability to deliver growth has already been demonstrated by its FY21 full-year results. Impressively, Camplify grew its gross transaction volume by 171% to $32.9 million year over year.
The opinions expressed in this article were as at December 2021 and may change over time.
