Money Talks: Finola Burke reckons proptech platforms need to expand their services amid a cooling real estate market
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MoneyTalks is Stockhead’s regular recap of the ASX stocks, sectors and trends that fund managers and analysts are looking at right now.
Today, we hear from Finola Burke, director at Raas Group.
Burke said she’s been following the proptech sector, and that Raas is of the view it’s counter-cyclical in a rising interest rate environment.
“There are two trends emerging in this sector – SaaS platforms that underpin real estate agent performance and transactional platforms that assist vendors, purchasers, agents and renters,” Burke said.
“We see demand for these services and platforms increasing in a cooling property market.”
For B2B proptech groups like PropTech Group (ASX:PTG) and RMA Global (ASX:RMY) Burke says the demand from real estate agents for automated workflow solutions and platforms that help them stand out amongst competitors is increasing in a slowing property market.
“Agents too want more transparency in the system and platforms that help shape vendor price expectations such as Openn Negotiation’s (ASX:OPN), platform also comes to the fore,” she said.
“Openn and RMA Global are both also in the US market which is already adjusting to increasing interest rates and they are both experiencing growing demand in that market.”
Burke said that transactional platforms that help automate rental payments such as Rent.com.au’s (ASX:RNT)RentPay platform and assist in property transfers such as PropTech Group’s Rello platform are also gaining traction.
“Our base case DCF valuation for PTG is $1.10/share, versus the current price of $0.575/share,” Burke said.
“Our PTG valuation is based on our expectation that it will secure 55% of agents using one or more of its products by FY31 versus 41% of agents today.”
The company was once known as Real Estate Investar Group but changed its name and had to re-apply to list on the ASX last year following several “proptech” acquisitions in the CRM space because it was a “significant change” to activities.
In July, the company acquired Eagle Software (a real estate CRM) for $7.5 million, which it said advances its objective to own, operate and invest in high-quality property technology businesses that primarily focus on the Australian, New Zealand and United Kingdom residential and commercial real estate markets.
It also increased PropTech’s market share from 31% to 38% in the Australian and New Zealand (ANZ) real estate CRM market.
Burke said Raas values Rent.com.au at $0.31/share, compared with the current price of $0.066/share.
“This is predicated on our forecast that RentPay will secure 5% of renters using its platform by FY23 and 20% by FY30,” she said.
In May, the company launched its RentPay app which simplifies the rent payment process.
And the platform is one of the most popular websites in Australia for property rentals – it has 3.9 million unique visitors, which have increased steadily over the years.
It recorded record revenues in the last quarter despite fewer renters moving homes due to lockdowns and is expecting a bumper Q3 once the traditionally quiet Christmas season is over.
As for Future First Technologies – which is the owner of farmbuy.com and enterprise management platform Asset Vision, Burke values it at $0.24/share, against a current price of $0.038/share.
“Our valuation of farmbuy.com is $0.05/share,” she said.
“Farmbuy’s move into livestock auctions is likely to be extended into farm equipment sales and other transactional platforms to extend the relationship beyond farm property listings.”
Raas recently hosted a webinar of five proptech micro caps to discuss the counter-cyclical nature of the sector which can be downloaded here.
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