Breakneck expansion in international markets is costing Cupid a fortune. A 69 per cent increase in marketing spend, and a big jump in operating costs, meant underlying cash profits at the online dating business were no better than last year's. Still, the fruits of that investment typically come through in the second half, while advertising spend is being scaled back – add that to Cupid's impressive growth profile and the shares look tasty.
Indeed, Cupid had a busy summer and broker Peel Hunt still expects adjusted pre-tax profit to grow to £16.3m for the full year, from last year's £10.5m, giving adjusted EPS of 14.7p (9.5p in 2011), rising to 19.9p in 2013. Average monthly subscriber numbers grew nearly a third to 540,000 and Cupid has done especially well in new markets where sales from the US, Canada, France, Italy, Spain and Germany more than doubled to £22.2m. Cupid believes it already has about 2 per cent of the £800m US market, the world's largest, and thinks it can grab 10-15 per cent within the next five years. Revenue from established regions, including the UK, was less impressive – up 6 per cent to £16m – but management still predicts double-digit full-year growth.
CUPID (CUP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 205p | MARKET VALUE: | £167.3m | |
| TOUCH: | 204-205p | 12-MONTH HIGH: | 252p | Low: 168p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 31p* | NET CASH: | £7.6m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 25.5 | 3.94 | 4.03 | nil |
| 2012 | 38.6 | 3.65 | 3.57 | nil |
| % change | +51 | -7 | -11 | - |
*Includes intangible assets of £14.3m, or 18p a share | ||||
