Real Estate Investar Group Ltd (AX:REV) is shifting its strategy, aiming to capitalise on its growing membership base of property investors to generate property-related transaction revenues. We have revised our forecasts to reflect a higher proportion of transaction-related revenues, the three-year agreement with Domain Group for data provision, and the Property Factory acquisition in Q416. Our EBITDA break-even forecast moves to H217 (from H216) and we reduce our DCF valuation to A$0.17 (from A$0.26).
FY16 results reflect the strategy shift
REV grew its membership base in line with expectations but generated a lower level of paid subscriptions than we expected in FY16, although this was almost entirely offset by a much higher level of property transaction income. Overall, EBITDA was 37% below our forecast and REV ended the year with net cash of A$2.0m. The revenue mix reflects the company’s aim to transition from a SaaS subscription strategy to a data-driven transaction strategy, using the knowledge of its membership base to generate property-related transactional revenues. Recent partnership agreements with Domain Group, eChoice Home Loans, Century 21 and VerdiPlus should help REV to market to new and existing members.
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