OnTheMarket

LN: OTMP

£60.5m market cap

96.5p last close

OnTheMarket is an estate agent-backed company that operates a synonymous property portal. It is the third-largest UK residential property portal provider in terms of traffic.

Investment summary

OTM continues to build market share and improve its brand recognition with agents and the public, with the renewed TV campaign helping boost website visits, in turn pushing more leads to agents. At end January, OTM had over 12,500 agency branches under listing contracts (67% share). The challenge now is to convert those on free introductory trials to paying clients. This process should be helped by the launch of a range of tools, including a free Market Appraisal Guide, and paid products such as differentiated on-site advertising options to increase a property’s visibility. In April, OTM announced it had over 1m users for its property alert service compared with Rightmove’s ‘over 2m’ in 2018. We continue to model OTM moving into profit and becoming cash flow positive in FY21. On an EV/revenue basis, backed by DCF modelling, the shares have good potential upside.

Y/E Jan
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2017A 15.6 3.3 1.0 (1.4) N/A N/A
2018A 13.5 5.4 2.7 7.4 13.0 N/A
2019E 15.0 (14.4) (16.0) (27.4) N/A N/A
2020E 32.0 (7.8) (9.4) (12.5) N/A N/A
Last updated on 17/05/2019
Industry outlook

Historically, the UK online property market was dominated by two portal providers, Rightmove and ZPG, the former being the clear market leader. While they generate high traffic, prices charged to participating agencies have risen, with no respite in sight prior to OTM’s arrival. The upcoming ban (from 1 June) on letting fees for tenants will put further pressure on agents’ marketing budgets.

Last updated on 17/05/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (22.2) (7.7) (36.7)
Relative* (20.9) (9.3) (32.7)
52-week high/low 181.0p/74.0p
*% relative to local index
Key management
Ian Springett CEO
Clive Beattie CFO