REA Group’s strategic stake in iProperty
Following our recent post on REA Group, I thought it worthwhile to observe the patience in which some companies invest their expansion capital.
On 28 July, REA Group (ASX: REA) announced the acquisition of 17.2 per cent in the ASX-listed iProperty Group Limited (ASX: IPP) for $106.3 million, valuing the Asian online property group at $618 million. REA Group’s interim CEO Peter Tonagh said: “This acquisition provides us with a strategic stake in one of the fastest growing real estate markets in the world and complements our existing business in Hong Kong, and the recent launch of MyFun.com and our partnership with Soufun.com in China”.
For the six months to June 2014, iProperty’s EBITDA was $30,084 on $11.0 million of revenue. With the $8.8 million impairment of assets from the Singapore and Indonesian operations, shareholders’ funds declined by $10.5 million to $20.6 million.
For the year to December 2014, revenue is expected to be $25 million, with Malaysia accounting for 63 per cent with Hong Kong, Indonesia and Singapore accounting for the balance.
The significant increase in online penetration has some brokers forecasting iProperty’s revenue, by 2020, to quadruple to $100 million, a compound annual growth rate of 26 per cent, and for their EBITDA margin to approach 50 per cent.
Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Jonathan Wilson
:
iProperty’s main competitor, PropertyGuru, has an equal footing in SEA, which is a worry. There’s still a way to go, but it looks like costs for iProperty are plateauing against rising revenues. 1H revenues are up from ~3m in 2010 to 11m this year, and it’s the first time iProperty has had positive EBITDA, surely a good sign?
zoran arnautovic
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REA/ IPP
Hi David
Reading in between lines this post got me fired up to do something about both of them.
What do you think the cost is to hire Arnold Schwarzenegger to do REA’s adverts?
Cheers