Like other ASX-listed ecommerce players, Zebit (ASX:ZBT) flagged record sales numbers in this year’s Black Friday promotion.

But investment firm Shaw and Partners said the result complemented a broad upward trend in Q4, which has left Zebit on track to exceed its prospectus revenue forecasts for the December half-year.

Analyst Danny Younis from Shaw, which acted as lead manager and underwriter for Zebit’s October IPO, highlighted the Q4 trend as part of a recent update to his research on the stock.

In an announcement last week, Zebit advised the market that it booked $US1.63m of sales on Black Friday, up 29.9 per cent from the year prior.

The company said it also booked $US23.5m of sales through October and November – a monthly average of $US11.75m.

Combined with the September quarter, Younis said Zebit “needs to only generate $US14.9m in net sales in December” to meet the half-year target of $US54m outlined in its prospectus.

December is “historically the strongest trading month” for Zebit, Younis said, typically generating around 40 per cent of Q4 sales.

Christmas cheer

If Zebit can round out the year with strong momentum, markets may take note as the ability for a company to match or beat its prospectus forecasts is often viewed as an important post-IPO barometer.

Zebit is included among the BNPL cohort because it provides pay-by-instalment services. Unlike other BNPL players, that payment offering is included as part of a vertically integrated ecommerce store that sells around 90,000 products to its US customer base.

In that context, Younis said a key metric for the business is its contribution margin, calculated as gross sales margin (revenue less cost of goods) adjusted for bad debt write-offs.

Since 2017, Zebit has increased its CM from 0.5pc to 12.3pc. The company posted a particularly strong CM of 22pc in the September, which Younis said was “aided by an abnormally low bad debts charge of just 6.3pc which we do not expect going forward”.

However, in its Black Friday trading update, Zebit said the “positive momentum” from its Q3 result had continued into Q4.

Younis said he’s also optimistic that Zebit’s strong Black Friday result ties in with the broader US tailwinds behind effective ecommerce strategies, in contrast to the outlook for bricks and mortar stores.

He added that at its current price below $1, Zebit trades on an enterprise-value-to-sales (EV/Sales) ratio of 0.4x.

Younis said that’s below the average of 2.2x for other ecommerce players such as (ASX:KGN) and Redbubble (ASX:RBL), and well below the average of 12.6x for listed BNPL players.

Zebit is now “ideally positioned for long-term growth, with a very large addressable market which is very fragmented — thereby enabling the company to pursue and drive scale”, Younis said.

Shaw currently has a 12-month price target of $2 for Zebit shares, derived from a discounted cash flow (DCF) model based on the company’s revenue outlook.