1,383% Gain Puts Internet-Video Stock Atop Australian Market
(Bloomberg) -- The technology industry isn’t a heavyweight in Australia, but it has provided investors with a stock that has jumped 1,383 percent this year.
Big Un Ltd., which uses its software to make promotional videos for restaurants, salons and other small businesses at lower costs, is the top performer this year among the almost 700 companies in Australia whose shares fetch at least A$1 (77 cents) apiece. A penny stock until June, Big Un closed at A$3.41 Wednesday and was worth A$510.8 million.
It’s hard to pinpoint what changed Sydney-based Big Un’s fortunes, but it’s been raising sales projections regularly. This month brought another revision, with the company forecasting revenue of at least A$22 million in the three months through Dec. 31, a 10 percent increase from expectations in November.
“We have perfected our business model and hit traction,” said Big Un Chairman Hugh Massie, who signaled his bullishness when he bought A$488,750 of shares at market price late last month. “Small businesses want video at a low cost and we are able to provide that through our combination of technology platform and operation structure.”
Big Un’s software helps reduce production costs by as much as 80 percent, Moelis & Co. estimates, to a few thousand dollars for a short video. The company said it had 4,900 paying subscribers as of September, who on average each contributed A$7,500 to quarterly revenue.
Founded by Executive Director Brandon Evertz in 2013 when he was just 19, Big Un listed on the local stock exchange a year later via a reverse takeover of former mining company Republic Gold Ltd. The shares traded at less than 50 Australian cents for the next 2 1/2 years before shooting up.
They have retreated 32 percent from their peak in November. The selloff prompted the company to say its disclosures were up to date, but it didn’t give a reason for the decline. The shares advanced as much as 15 percent Wednesday after Big Un said it had reached an agreement with marketing company Zeta Global to expand in the U.S.
Some investors have avoided the stock, saying Big Un doesn’t yet have a proven track record.
“Big Un is performing great, but most of its clients are young clients,” said Guy Carson, chief investment officer at Sydney-based Quick Brown Fox Asset Management. “We need to see retention rates before we know the growth is sustainable.”
Carson prefers Gentrack Group Ltd., which makes software for utilities companies and whose Australian-listed shares have climbed 77 percent this year. About 32 percent of his A$20 million portfolio is invested in technology stocks.
The industry represents less than 2 percent of Australia’s benchmark S&P/ASX 200 Index. It has the heaviest weight on the S&P 500 Index, accounting for about 24 percent of the measure.
Big Un has said it plans to add videos of consumers reviewing businesses in the future. That would mean competing with the likes of TripAdvisor Inc. and Yelp Inc., according to Moelis’s Keiran Hoare, the only analyst covering the company in data tracked by Bloomberg. He recommends buying the shares, which he expects to reach A$5.58 in a year. That’s a gain of another 64 percent from Wednesday’s close.
©2017 Bloomberg L.P.