Carsales.com Limited: In-depth Analysis and Performance Review

This report provides a comprehensive analysis of Carsales.com Limited, an ASX-listed company and a leading online automotive marketplace. It examines the company's structure, vision, subsidiaries, and recent corporate activities, including acquisitions and capital raising. The report details Carsales.com's business activities, including its flagship website and various subsidiaries like Bikesales.com, Boatsales.com, and Redbook.com, and classifies them into key business segments such as online advertising, data services, and international operations. It further delves into the company's financial performance through horizontal and ratio analyses of its balance sheet and profit and loss statements, providing insights into its stock market performance and competitive landscape. A SWOT analysis highlights Carsales.com's strengths, weaknesses, opportunities, and threats, followed by a discussion of its future prospects. The report includes financial statements and segment-wise revenue data in the appendix.

Carsales.com Limited – Company Analysis
Name
Submitted By
Date
Lecturer’s Name

Table of Content
About the Company...............................................................................................................................4
Vision of the Company......................................................................................................................4
Structure............................................................................................................................................4
Subsidiaries and Divisions:............................................................................................................5
Recent Corporate Activities...................................................................................................................7
Business Activities................................................................................................................................8
 Carsales.com..............................................................................................................................8
 Bikesales.com............................................................................................................................8
 Boatsales.com............................................................................................................................8
 Redbook.com.............................................................................................................................8
 Datamotive.com.........................................................................................................................9
 Carfacts.com..............................................................................................................................9
 Ryvusiq.com..............................................................................................................................9
 Strattonfinance.com...................................................................................................................9
 Encar.com..................................................................................................................................9
Businesses Classification...................................................................................................................9
 Quick Sales............................................................................................................................9
 Data Motive.........................................................................................................................10
 Click4Finance......................................................................................................................10
 E-Carsales.com.au...............................................................................................................10
Company Operations...........................................................................................................................10
Sectorial Performance......................................................................................................................11
Corporate Finances..............................................................................................................................12
Horizontal Analysis of Balance Sheet..............................................................................................12
Horizontal Analysis of Profit and Loss Statement...........................................................................13
Ratio Analysis.................................................................................................................................13
Stock Market.......................................................................................................................................14
Competitive Performance....................................................................................................................15

Industry Overview...........................................................................................................................15
Carsales.com SWOT Analysis:........................................................................................................15
 Strengths..............................................................................................................................16
 Weaknesses..........................................................................................................................16
 Opportunities.......................................................................................................................16
 Threats.................................................................................................................................16
Future of the Company........................................................................................................................17
References...........................................................................................................................................18
Appendix.............................................................................................................................................21
1. Profit and Loss Statement of Carsales.com for Period FY 2014-18.........................................21
2. Segment wise revenues of Carsales.com for Period FY 2014-18.............................................22
3. Horizontal Analysis of Balance Sheet......................................................................................22
4. Horizontal Analysis of Profit and Loss Statement...................................................................23
5. Ratio Calculations....................................................................................................................24

About the Company
Carsales.com is a public non-listed company under ASX: CAR, it is the biggest online dealer of
automobiles, motorcycles and marine described businesses in Australia. The company caters to
individuals with a demand for buying an automobile (cars, trucks, caravans etc), motorcycles, boat or
even a harvester through its distinct and targeted group subsidiaries. Carsales.com has a global
footprint which currently caters to Australia, South Korea, Brazil, Malaysia, Indonesia, Thailand and
Mexico (Carsales.com Ltd. 2018).
Employing more than 600 individuals, the company has been able to mark its presence in major
developing and developed markets across the globe with service like advertising solutions and its core
competency of buying and selling automobiles, motorcycles and marine classifications.
Vision of the Company
The company wants to create a platform to cater to individuals for a streamlined and a hassle-free car
buying or selling experience. In the process, Carsales.com creates an equal opportunity for all the
vertically integrated segments in the buying and selling process, i.e. the manufacturers, the dealers
and the ultimate consumers.
Carsales.com has build its brand equity in Australia and consistent efforts towards the same, the
company has been able to make technological advancements which has led to current situation in
which the company has marked its global footprint.
The brand equity of carsales can be understood by their belief of providing each and every customer
with same level of technology if he/she is buying or selling a car, a motorcycle, a caravan, a truck, a
boat or even a combine harvester for that matters (Carsales.com Ltd. 2018).
Structure
After its beginnings in 1997, Carsales.com became a non-public listed company in 2000 and is
currently traded under the symbol “CAR” in the ASX (Australian Securities Exchange) (Carsales.com
Ltd 2018). By the end of FY 2018, the holding company i.e. Carsales.com Ltd. had a total contributed
equity of AUD ~119 Mn (Carsales.com Ltd, 2018).
During the period FY 2014-18, the contributed equity has increased in line with the increase in total
equity. In the period mentioned, the contributed equity and the total equity have grown by CAGR of
~11.41% and ~15.70% respectively. Furthermore, annual year on year (Y-o-Y) increase has been
relatively higher as compared with the average growth for past five financial years at ~ 12.92% and
~21.17% respectively.

FY 2018 FY 2017 FY 2016 FY 2015 FY 2014
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
119,541
105,861 99,026 91,905
77,603
335,821
277,160 260,370
229,513
187,376
Contributed Equity vs Total Equity
(In AUD '000)
Contributed equity Total equity
Source: Contributed Equity vs Total Equity (Carsales.com Ltd AR, 2014-18)
Subsidiaries and Divisions:
Carsales.com’s businesses have been broadly classified into five types of business verticals namely:
 Online Advertising Services:
These can further be classified in two sub-segments namely: Classified Advertisements and Display
Advertising.
Classified Advertising refers to the platform which allows both dealers and consumers to advertise
their buying or selling proposition of automotive or non-automotive goods and services with the help
to diversified Carsales.com network.
Display Advertising on the other hand, acts as an add-on benefit for Carsales.com as it refers to the
services in which customers like OEMs or Insurance companies etc. can display their advertisements
to leverage on the footfall generated by Carsales.com network.
*Online Advertisement Services also include Tyresales.com which allows customers to buy or sell tyres.
 Data, research and services:
This segment enables the company to provide its stakeholders (including OEMs, dealers, external
bodies, insurance companies etc) with its product offerings namely software, analysis, research
reports, valuations, website and hosting services.
Since inception of FY 2018, Carsales.com has increased its investments in this segment. A recent
update in this regard, the ‘2017 Auto Buying Journey Study’ which is a quarterly published market
paper has found its grounds amongst the stakeholders.

 International Segments:
The company operates in the international markets with its various subsidiaries and divisions.
Furthermore, after completing the acquisition of SK ENCARSALES.COM Ltd in Jan’2018, the
Carsales.com group have divided its international operations into two segments namely Latin America
and Asia (Carsale.com AR, 2018). The holdings thereon are mentioned as under:
 Latin America:
Subsidiary Name (Online
Automotive Classifieds) Operating Geography Holding (in %)
Webmotors S.A. Brazil 30%
Chileautos SpA Chile 83.3%
carsales Mexico SAPI de CV Mexico 100%
Demotores Chile SpA Chile 100%
Demotores S.A. Argentina 100%
Demotores Colombia S.A.S. Colombia 100%
Source: Carsales.com Ltd. Annual Report, (2018)
 Asia:
Subsidiary Name (Online
Automotive Classifieds) Operating Geography Holding (in %)
iCar Asia Limited Indonesia, Malaysia and
Thailand
13.1%
SK encarsales.com Ltd South Korea 100%
Subsidiary Name (Automotive
Data Services) Operating Geography Holding (in %)
Auto Information Limited New Zealand 100%
RedBook Automotive Services
(M) Sdn Bhd
Malaysia 100%
RedBook Automotive Data
Services (Beijing) Limited
China 100%
Automotive Data Services
(Thailand) Company Limited
Thailand 100%
Source: Carsales.com Ltd. Annual Report, (2018)

 Finance and Related services:
This segment is responsible to generate revenues to innovative mechanisms to provide the customers
with vehicular finance for procurement or related services. The primal revenue model for the segment
is commissions arising from financing and related service providers. Carsales.com Ltd as of FY 2018,
have holdings in:
i. Stratton Finance Pty Ltd
ii. RateSetter Australia Pty Ltd
iii. PromisePay Pte Ltd
With former being direct subsidiary with a holding of 50.1% and the latter two being equity accounted
associates with a holding of 18.6% and 7.1% respectively (Carsale.com AR, 2018).
Recent Corporate Activities
As per Carsales.com Ltd Annual Report 2018, the company has finished the acquisition of SK
encarsale.com limited which operates in South Korea by January 2018. Furthermore, the snapshots for
corporate takeovers and disinvestments being carried out in FY 2018 are as under (Carsale.com AR,
2017-18):
 Increased the holdings in SK encarsales.com Ltd from 49.9% in FY 2017 to 100% in FY
2018.
 Increased the holdings and completely acquired carsales Mexico SAPI de CV from 65% in
FY 2017 to 100% in FY 2018.
 Decreased the holdings in iCar Asia Limited from 15.6% in FY 2017 to 13.1% in FY 2018.
In respect to Capital Raising activities, Carsales.com Ltd. have cumulatively increased its contributed
equity shares from 241,785,292 in FY 2017 to 242,982,207 in FY 2018. In value terms, the number of
contributed shares issued accounted to AUD ~119 Mn. The complete break up of all the transactions
which happened in FY 2018 is as under:
Date Particulars Number of shares Issue price
(in AUD)
In AUD
’000
01-Jul-17 Opening balance 24,17,85,292 1,05,861
Aug-17 Exercise of employee options 2,237 9.10 20
Aug-17 Exercise of employee performance rights 35,691 0.00 –
Sep-17 Exercise of employee options 2,00,368 5.93 - 9.10 1,205
Oct-17 Dividend Reinvestment Plan 4,68,702 12.97 6,081
Oct-17 Exercise of employee options 1,433 9.10 - 10.71 15
Oct-17 Exercise of employee performance rights 11,416 0.00 –
Nov-17 Exercise of employee options 7,873 9.10 - 10.71 83
Dec-17 Exercise of employee options 3,835 9.10 35
Feb-18 Exercise of employee options 5,565 10.71 60
Mar-18 Exercise of employee options 9,339 9.10 - 10.71 88
Apr-18 Dividend Reinvestment Plan 4,38,169 13.63 5,976
Jun-18 Exercise of employee options 12,287 9.10 - 10.71 117

30-Jun-18 Balance 24,29,82,207 1,19,541
Source: Carsales.com Ltd. Annual Report, (2018). pp. 113
Business Activities
Carsales.com Ltd possess a wide variety of products and services under its belt, from trading of
automobiles to data and research services, the company entails them all. The Carsales network is
amongst one of the most classified and consumer centric portals for trading automobiles, marine
classifications, industry machines, farming equipment, automobile auxiliaries, data and research
portals and financing portals amongst others (Carsales.com Ltd. 2018).
A brief about few of the Carsales network is mentioned as under:
 Carsales.com
Carsales.com is the flagship website of the carsales.com network with maximum no. of footfalls in
respect to all other websites in the network. Carsales.com enables customers to buy and sell
automobiles. The website provides a common platform for new and used automobile buyers with
vivid services making it one of the most sought for website in the mindset of Australian customers
(Carsales.com Ltd. 2018).
 Bikesales.com
Bikesales.com is a division of the parent organisation i.e. the carsales.com and is responsible for all
the activities that carsales.com provides, the only difference being the commodity being traded is not
car but a bike (motorcycle). It provides the users with options like buying and selling of motorcycles,
research, news and reviews and also provides option for users to locate a dealer or to become one
(Bikesales.com, 2018).
 Boatsales.com
Boatsales.com is the no. 1 preferred website to buy marine classifications of all types at one place.
Boatsales.com provides its customers with varied options including buying, selling, researching and
news about happenings in marine classified section (Boatsales.com, 2018).
 Redbook.com
Redbook was founded by Keith Halfhide in Sydney. Since its beginnings in 1940’s, the brand has
established itself as one of most trusted valuation and information source for automobiles. The
Redbook website i.e. www.redbook.com.au was created and had its launching in Nov’1997, beyond
which the portal has been creating benchmarks for valuations and information source till now
(Redbook.com, 2018).

Redbook’s data is trusted upon to the level that even industry and general public uses it alike along
with other users including industry players, financing and insurance industry and the government
(Redbook.com, 2018).
 Datamotive.com
Datamotive is responsible to cater the carsales.com divisions and subsidiaries with relevant tailor-
made online inventory management services along with research and software solutions
(Datamotive.com, 2018).
 Carfacts.com
Carfacts is a portal offered by carsales.com for creating reports on used cars which provides a holistic
viewpoint for the customers of the product that they are interested in. The report generated by
Carfacts.com provides the customers with essentials including financing of the vehicle, if the vehicle
is been written off, if it has been stolen, odometer distortions and with many other essentials
(Carfacts.com, 2018).
 Ryvusiq.com
Ryvusiq.com is a service provided by carsales.com for customers having a requirement of fast and
flexible feature rich search engine which is also scalable and can build classified and e-Commerce
websites, apps and portals as per customer’s needs (Ryvusiq.com, 2018).
 Strattonfinance.com
Stratton Finance was acquired by Carsales.com Ltd in 2014, thereby creating a single window
opportunity for customers of carsales.com to finance new cars, get finance on the asset (car) mortgage
and also insurance & warranty services (StrattonFinance.com, 2018).
 Encar.com
Based on its rich 15-year experience in the online marketplace Encar.com has become South Korea’s
number one online market place to trade or research about a car of liking of the customer.
Furthermore, in FY 2018, Carsales.com completed its acquisition of Encar.com and currently has
100% holdings in the organisation (Encar.com, 2018).
Apart from the aforementioned websites, Carsales.com also possess a network of sites including
Soloautos.mx, Chileautos.cl, Webmotors.com.br, Carlist.my, Mobil123.com, Thaicar.com,
One2car.com etc (Carsales.com Ltd. 2018).
Businesses Classification
As per the data retrieved from Australian Business Register (2018), Carsales.com Ltd currently
operated through four business names mentioned below:

 Quick Sales
Quick Sales was registered on 28th Feb 2011 and is currently active
 Data Motive
Data Motive was registered on 22nd Feb 2010 and is currently active
 Click4Finance
Click4Finance was registered on 5th May 2008 and is currently active
 E-Carsales.com.au
The Primal E-Carsales.com.au was registered with ASIC on 22nd Oct 2001 and is also currently active
Company Operations
The revenues from continuing operations of Carsales.com stood at AUD ~444 Mn in FY 2018.
Amidst the stagnant growth of macroeconomic indicators, the company has laid its roots through
technological advancements and rigorous expansion which has helped the company to grow by a
CAGR of ~17.11% during the period FY 2014-18, thereby beating the growth rate of Australia
consistently.
Furthermore, the revenues have grown by an annual growth rate of ~19.32%, outpacing its own
average benchmark growth rate of ~17.11% during the past five financial years. The prima facie
reason for this growth was the acquisition of SK encarsales.com and the division of International
business segment into Latin America and Asia, of which Asia in its first year of divide completely
destroyed the numbers marked by Latin America being ~3.63 times more revenue providing
geography as compared with the former.
FY 2018 FY 2017 FY 2016 FY 2015
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
Revenues Vs Profit for the period (In AUD '000)
Revenues Profits
Source: Revenues vs Profits s(Carsales.com Ltd AR, 2014-18)

On the Profit front, the company portrayed an even better performance as the profits increased by a
CAGR of ~18.25%, beating its average growth rate of revenues as mentioned above, which leads to
conclusive statement that Carsales.com have also optimised their operations amidst their expanding
operations. In absolute terms, the Profits from continuing operations have increased from AUD
~96.27 Mn in FY 2014 to AUD ~188.21 Mn in FY 2018.
However, the major chunk of this surge can be accredited to only a Y-o-Y increase being experienced
in FY 2018. In percentage terms, the profits grew ~66.53% on an annual basis in FY 2018, mainly
because of an abnormal gain on step acquisition of associate which amounted to AUD ~57.02 Mn.
Sectorial Performance1
In Sectorial Performance, Carsales.com Ltd generates its major pile of revenues from Online
Advertising Services, which accounted for more than 65% of its total revenues in FY 2018. The other
major sources have been Data, Research and Services along with Finance and Related Services, which
cumulatively accounted for ~25% of the total revenues earned by the company in FY 2018. The last
segment being International segment which was segregated amongst Latin America and Asia in FY
2018 contributes the smallest portion towards the total revenues.
However, after the acquisition of SK Encarsales.com the revenues from International Segment Sky
Rocketed by ~ 358.11% Y-o-Y increase in FY 2018. In Absolute terms, the international segment
contributed around AUD ~8.3 Mn in FY 2017 and in FY 2018 it contributed AUD ~38.01 Mn.
FY 2018 FY 2017 FY 2016 FY 2015 FY 2014
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Segment Wise Revenues (In AUD '000)
Online Advertising Services Data, Research and Services
International Finance and Related Services
Source: Segment wise revenues breakup (Carsales.com Ltd AR, 2014-18)
The OAS (Online Advertising Services) increased from AUD ~203.86 Mn in FY 2014 to AUD
~295.59 Mn in FY 2018, indicating a CAGR growth of ~9.73% during the said period. On annual
1 For Complete segment performance in past 5 years, see Appendix 1

basis, the growth was in in-line with the average growth, only a marginal increase was experienced at
~9.83%. The aforementioned Y-o-Y growth indicates that the segment has matured and is currently
acting as a cash cow for the company, therefore the company should look for alternative investments
the this point on.
On the other hand, growing steadily and outpacing other segments (except for international segment)
is the Finance and Related Services segment of the company, which has witnessed a CAGR growth of
~23.65% during the said period. However, the EBITDA margins haven’t experienced the same
growth rate, rather they have de-grown by ~3.64% during the said period.
FY 2018 FY 2017 FY 2016 FY 2015 FY 2014
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
30,000
Segment Wise EBITDA (In AUD '000)
Online Advertising Services Data, Research and Services
International Finance and Related Services
Source: Segment wise EBITDA breakup (Carsales.com Ltd AR, 2014-18)
The EBITDA on the other hand, for OAS (Online Advertising Services) has been considerably lower
as compared with the revenue growth from the segment, thereby losing its juice. In percentage terms,
the EBITDA from OAS have grown at a CAGR of ~6.73% during the period FY 2014-18.
Corporate Finances
Horizontal Analysis of Balance Sheet
The percentage increase of the balance sheet total has been ~68.87% during the period FY 2014-18,
with individual heads namely Current Assets, Non-Current Assets, Current Liabilities, Non-Current
Liabilities and Equity growing at ~51%, ~72.4%, ~386.24%, ~28.56% and ~21.17% respectively
during the said period.
Amongst current assets, inventory grew the most by a CAGR of ~144.66% followed by cash and cash
equivalents which grew by a CAGR of ~63.49% during the mentioned period. In non-current assets,