OnTheMarket

LN: OTMP

£80.5m market cap

130.5p 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 make good progress in building market share and improving brand recognition both with agents and the public, helped by the renewed TV campaign. As at 12 December, the group had over 12,000 agency branches under listing contracts – a 64% share. This includes 60 offices which have recently entered full tariff paying listing arrangements. The challenge now is to convert the balance of agents to paying clients and grow the proportion holding OTM shares. The case against OTM on competition grounds by Gascoigne Halman has now been dismissed by the Court of Appeal. We continue to model the group 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 17.6 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 21/02/2019
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. In a market where the volume of transactions has been under pressure, achieving good visibility is even more important. Silver Lake’s takeover of ZPG highlights the value.

Last updated on 21/02/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 56.3 17.0 (21.2)
Relative* 52.2 14.8 (19.6)
52-week high/low 181.0p/74.0p
*% relative to local index
Key management
Ian Springett CEO
Clive Beattie CFO