In a miserable environment for small cap industrial stocks, investors are seeking those rare companies with a robust business model aligned to the consumer’s increasingly frugal mindset.

We’re not talking about purveyors of brown rice and kerosene – or not just yet – but cheaper holidays.

The Airbnb of the caravan and motorhome sector, Camplify (ASX:CHL) is cruising along in both its home market and in Europe, where it has expanded via acquisition.

A classic peer-to-peer operator, Camplify connects owners of recreational vehicles (RVs) with renters and facilitates contracts, insurance and payments in return for a hefty clip of the ticket.

Camplify founder and CEO Justin Hales says as the economy tightens, the RV sector performs better – a trend evident since the 1970s.

“Customers are determined to have a holiday but they want to (optimise) the spend,” he told the recent Australian Microcap Investment Conference. “We are providing a relatively low-cost holiday.”

He claims Camplify is 25-30 per cent cheaper than mainstream RV rental companies, which congregate on expensive airport real estate and focus on inbound tourism rather than domestic holidaymakers.

On the supply side, there are 800,000 privately owned RVs in Australia and most of them sit in the driveway for 46 weeks of the year. Monetising these assets via a trusted intermediary is a safe way of stretching household budgets.

If anything, Hales says, the company is constrained by supply. The site lists 15,000 RVs here and 18,000 in Europe, a fraction of the market relative to van ownership.

A year ago Camplify acquired the Berlin-based equivalent PaulCamper, adding Germany, Austria and the Netherlands to its operations that already covered the UK, Spain and NZ.
The $47 million purchase doubled the size of Camplify’s business overnight.

Camplify recorded total transaction value (TTV) of $146 million in the year to June 2023, up 172 per cent. Revenue climbed 133 per cent to $38 million, with turnover in NZ – a.k.a RV Isle – surging 1100 per cent.

Last week the company reported September (first) quarter TTV of $41.5 million, up 107 per cent and revenue of $11.7 million (up 114 per cent).

For the fourth consecutive quarter the company was also cash flow positive to the tune of $80,000 compared with a $1.6 million a year ago.

Of the average booking fee of $1733 in 2022-’23, Camplify snaffled $437 – 25 per cent – but this clip of the ticket is now close to the targeted 30 per cent.

In future, Camplify expects to make almost as much from its insurance operations, called MyWay, as booking fees.

For investors Camplify has been a comfortable ride since the company listed in Covid-afflicted June 2021, with the shares gaining more than 50 per cent.

Hales notes that Camplify has an overall one per cent market share across its geographies.

One enduring question is whether Camplify is vulnerable to new competition as the peer-to-peer accommodation giants cotton on to the opportunity.

Hales says the likes of Stayz don’t see the business as meaningful and would struggle with economies of scale.

“We have built a specific platform for accommodation on wheels, which is very different to a hotel or renting a car,” he says.

“Stayz is unlikely to launch, but they could always acquire the leading operator and that happens to be us.”

There’s certainly a precedent. The owner of the leading Maui and Britz brands, NZ’s Tourism Holdings, last year acquired ASX-listed RV renter-outer Apollo Tourism and Leisure – but not before the competition watchdog had a good hard look.

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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