ASX:SEK
Seek Ltd
Investment Summary
The fund managers believe that despite recent volatility in Seek Ltd's share price, mainly due to index exclusion and challenging earnings results, the company continues to make a positive overall contribution to their portfolios. They see 2025 as a potential turning point for Seek Ltd, mainly due to improved cost control and a strong focus on shareholder returns. In their opinion, Seek Ltd, being the largest online employment classifieds business in Australia, possesses significant pricing power and has the potential for listing volume growth following a period of decline. The managers highlight that the AGM update has not resulted in an earnings downgrade, strengthening their conviction in management's strategy. With a possible partial monetization of the SEEK Growth Fund anticipated in 2026, they see considerable upside potential for Seek Ltd as a transitioning business, especially with a more attractive valuation compared to its peers.
Commentary From The Managers
Ten Cap
28 Feb 2025
$23.98
- Ten Cap observes volatility in Seek's share price due to index exclusion and earnings results.
- This volatility did not negate the overall positive contribution of Seek (SEK).
- Ten Cap has added to their position in Seek.
- They rotated out of more expensive classifieds like REA.
- This move aims to capitalize on cyclical tailwinds and promising data.
- The data suggests that consensus volume expectations could be exceeded.
Blackwattle Investment Partners
31 Dec 2024
$22.57
- SEK was the largest negative contributor to performance, falling 14% in December due to pressure on technology stocks.
- SEK is the largest online employment classifieds business in Australia.
- At the AGM in late November, SEK reiterated revenue guidance for FY25 while slightly reducing cost guidance.
- SEK has underperformed in 2024 compared to technology peers, driven by cyclical volume headwinds and disappointing cost control.
- 2025 is seen as a potential turning point for SEK.
- The November AGM update marks the first instance in a few years without an earnings downgrade, increasing confidence in management's focus on cost control and shareholder returns.
- Over the next couple of years, SEK has the potential to improve earnings through strong pricing power, cost control, and listing volume growth.
- SEK can also enhance its capital structure with potential partial monetization of the SEEK Growth Fund in 2026.
- There is strong upside for SEK as an ‘improving quality’ business with significant earnings and capital optionality, combined with a materially cheaper valuation multiple to peers.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.