This morning OnTheMarket (LON:OTMP) management confirmed that “as of 31 January 2019, it has listing agreements with UK estate and letting agents with more than 12,500 branches. This is an increase of more than 7,000 branches in just under a year since Admission to AIM in February 2018.”
The statement added: “The sales team is continuing to see encouragingly high levels of agent support and conversion to signed contracts when it presents the opportunity of listing on an agent-backed portal.”
Ian Springett, OTM’s CEO, said: “We are confident in our ability to deliver a market-leading, agent-backed alternative to Rightmove and Zoopla, continuing to inject much-needed competition in the portals market, while delivering a superior digital user experience for property-seekers.”
Zeus view
This announcement confirms that OTM has grown the network precisely in line with Zeus forecasts made pre-IPO.
Details of our forecasts and the assumptions which underlie them are set out in the notes we published recently:
Over 12,000 offices published on 14 January 2019
Appeal Court in favour of OTM published on 25 January 2019.
These notes reproduce Testimonials from Estate Agents which confirm that OTM is providing much needed competition and increasing marketing yield for its Estate Agents. Evidence of Agents leaving Rightmove and increasingly relying on OTM is emerging.
Valuation
In our opinion equity market value per office is a useful indicator. At 92.5p a share OTM has over 12,500 offices and is trading on an equity market cap of £55.3m (i.e. only £4.4k/office; Rightmove is trading on £232k/office), which does not reflect the value of these relationships which we estimate to be more than £20k/office.
The allocation of over 35m shares to agents should secure long-term agreements with high quality agents.
By 2020-21, with the portal delivering an EBIT margin of over 30%, we would expect OTM to trade on over £20k/office, which would be consistent with a fully diluted share price of over 300p a share.
