Carsales silent on iCar Asia's Thai buy

Its share price has fallen due to the capital raising, but iCar Asia (ASX: ICQ)'s acquisition of Thailand's No. 1 car classifieds website, One2Car, looks like a cracker. Here are a few highlights:

• the site has 1.2m unique visitors a month 'without meaningful ongoing marketing';
• it has about 37,000 listings from around 1,800 dealers (about 90% of the available market);
• all dealers using the site pay for subscription-based services;
• One2Car makes annual revenue of 45m baht (about $1.5m) and has been marginally profitable for each of the past three financial years;
• online advertising still only accounts for 3.5% of Thailand's $4bn advertising market, but is growing at about 24% a year;
• the population of Thailand is 3x Australia's, at 70m;
• GDP per capita in Thailand is now close to US$6,000 which, says iCar Asia, is above the level at which car ownership typically accellerates;
• there are 12m registered cars in Thailand, growing at 5% a year;
• chief executive Khun Teerawat will remain for two years.

Given all this, the price of 474m baht ($16.7m) (plus $0.9m in staff bonuses) doesn't look too steep. As well as $13.4m in cash, the owners will take $3.3m in iCar Asia shares. The cash portion is being funded by a share placement at $1.10 to raise $21m and there will also be a share purchase plan to raise $4m – but it would have been cheaper, simpler and fairer to do the whole thing via ASX Bookbuild.

The big question, though, is whether Carsales.com (ASX: CRZ) has taken up its share of the placement. Under its agreement with iCar Asia, Carsales is prevented from taking its shareholding beyond 22.9%, but it does have a right to maintain its shareholding at that level. Of course, it's small beer for Carsales, so it doesn't have to comment under the listing rules, but it would be nice to have a clear announcement as to whether it has exercised this right.

We brought iCar Asia to the attention of readers of this blog back in April last year – see Wild punt – or a careful speculation? – and as I highlighted there I bought some shares myself. I took some profits earlier this year, but will probably top up again under the share placement plan assuming the price remains above $1.10. To me the share price still looks like a bargain, but the stock undoubtedly remains a speculation, if not a wild punt.

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