Onthemarket PLC (LON:OTMPO) has released full-year results to January 2018, just prior to its listing. Of greater interest is the strong progress in recruitment of estate and letting agencies, with listing agreements now signed with over 8,500. This is driving good levels of traffic to the portal, which in turn should demonstrate its value to the agency customers ahead of the end of the discounting. We maintain our revenue forecasts, but have dialed back the anticipated marketing spend in view of the success to date. Our longer-term modelling indicates a return to profit in FY21. On EV/revenue and DCF modelling, the shares have good potential upside.
Good increase in reach
OnTheMarket has added agency branches at a good pace, with over 8,500 now participating, up 3,000 since listing. The recent (May 2018) high-profile TV and outdoor marketing campaign has boosted market recognition and traffic to the portal. YTD, there have been 42.2m visits, up from with 21.9m for the comparative period. Management indicates that feedback from the agents is that this is good-quality traffic, with a high proportion of genuine interest, rather than simple browsing. New branches are coming on to the roster on free or discounted fees, rather than in exchange for equity. The group is achieving the quantum of scale needed to make it a credible alternative to the two main UK incumbents, Rightmove Plc (LON:RMV) and Zoopla. It will also be extending its remit to include new home developers and online agents, as well as advertisers of commercial and overseas properties.
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