From SMH a couple of days ago:
Property website owner Onthehouse listed amid much fanfare in May 2011 at $1 a share, after raising $55 million, now trades at 54 cents and has a market cap of $44 million.
In contrast realestate.com.au owner REA’s stock has more than tripled in this period and its market cap is $6.5 billion, which means that Onthehouse wouldn’t even be an appetiser for the property retailing giant (maybe an hors d’oeuvre).
And after all, Onthehouse has what REA wants, so a takeover would make sense. Onthehouse is like a gossip site which provides people with a feel for what their own and potential neighbourhoods are like, in terms of house prices. It is your first port of call. A property buyer can then go to the listings at REA's realestate.com.au to find the houses that are available.
As one of its institutional shareholder says, “Ideally REA would want all the traffic to go to itself. By the time you come to REA you have already decided the suburb. If it can get to the customers at an earlier point and you have an ongoing relationship with them.”
Advertisement
The options available to REA are Onthehouse, Fairfax Media’s Domain assets or RP Data. The advantage that Onthehouse has is that it already gets the lion’s share of data, having signed up 40 per cent of all realestate agents for its “Real Estate Solutions” business.
Backtracking for a second, when it first listed, we noted that its business model was stable in one sense, where Real Estate Solutions provides back office and software requirements for real estate agents, which generates about $20 million in revenues and $8 million in earnings. The data from this business is provided to its much riskier potential growth engine 'Consumer Online', which provides consumers with free data on past house prices in order to develop leads for those servicing the property industry.
So far, it’s clear that the property website’s strategy has floundered in many investors’ eyes. But looking at its recently released first half profit result, there is no doubt that Onthehouse’s fortunes are changing for the better. Online sales revenue is up 66 per cent, driven by advertising from all four big banks, and traffic is up 29 per cent since January 2013.
As we have told investors, Onthehouse’s business is an upstart, so expect a bumpy ride. But the company produces lots of cash from its 'meat and potatoes'Real Estate Solutions business.
We don’t like Onthehouse because we think it makes sense for REA to buy it. We like it because it’s cheap. Also, it pays to remember that on the internet you can be a leader like REA one day, and a loser the next. You’re just one click away from a competitor.
Read more: http://www.smh.com.au/money/investing/could-onthehouse-provide-a-tasty-morsel-for-rea-20140319-351uv.html#ixzz2wXelECRz
- Forums
- ASX - By Stock
- OTH
- new investor
new investor, page-2
-
-
- There are more pages in this discussion • 1 more message in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)