Foxtons, one of London’s leading estate agencies with more than 50 interconnected branches across London, has signed an agreement to advertise its UK residential sales and letting properties at OnTheMarket plc (LON:OTMP).
Zeus view: Foxtons, the well-known London Estate Agent, joining OnTheMarket (OTM) benefits OTM in at least three ways:
¨ Foxtons joins OTM’s ecosystem, including other strong UK residential property brands n.b. OTM’s founders included: Knight Frank, Savills, Strutt & Parker, SpicerHaart, KFH, Chestertons, Douglas & Gordon and Glentree Estates; in the past 2 years 9 of the top 10 property developers and over 100 SME developers have joined OTM
¨ Supports OTM’s position as the “go-to portal for serious property-seekers”: in London OTM has thousands of advertisers, including:
- 108 Kinleigh, Folkard & Hayward offices
- 51 Savills offices,
- 47 Knight Frank offices,
- 39 Haart office
- 35 Chestertons offices;
- 32 Hunters offices
- 31 Chancellors offices,
- 26 Acorn offices
- 17 Douglas & Gordon offices
- 13 Benham and Reeves offices
- 12 Strutt & Parker offices,
- 12 Goldschmidt & Howland offices
- 12 JLL offices
- Other groups e.g. Aspire, Balgores, Bective, and Carter Jonas, with London presence
¨ Foxtons’ 50 branches provides c. 6% of our forecast growth in OTM advertisers.
We leave our forecasts unchanged: we are confident in our forecasts.
Valuation: At 85p, with 10p of cash, OTM is trading on under 1.7x historic EV/Revenue and 1.5x current year.
We believe that investors should be confident OTM will operate to the “rule of 40” (i.e. revenue growth plus EBITDA margin of 40%) and should expect OTM to trade on over 6x prospective revenue (i.e. c. £216m, which is 263p a share).
Jason Tebb, CEO, commented: “We are delighted to welcome Foxtons to OnTheMarket.
“We have been working hard to enhance our offer, adding products and services to deliver greater value to agents and consumers.
“Being recognised by Foxtons is further proof that our strategy is working and there is more to come as we continue to develop our differentiated, technology-enabled property business.”
Summary financials
| Price | 85p |
| Market Cap | £64m |
| Shares in issue | 75.0m |
| 12m Trading Range | 72.5p– 129.0p |
| Free float | 95% |
| Next Event | 26 July AGM |
Financial forecasts
| Yr end Dec (£’m) | 2022A | 2023E | 2024E | 2025E |
| Revenue | 30.4 | 35.5 | 39.4 | 43.7 |
| yoy growth (%) | 32 | 17 | 11 | 10 |
| EBITDA | 5.1 | 8.3 | 11.2 | 13.7 |
| EBITDA margin (%) | 17 | 23 | 28 | 31 |
| Adj. PBT # | 1.7 | 3.9 | 6.1 | 7.9 |
| Adj. PAT # † | 1.9 | 5 | 6.6 | 7.9 |
| Avg FD shares (m) | 81 | 82 | 83 | 84 |
| EPS (p) fd. Adj # † | 3.1 | 6.1 | 7.9 | 9.5 |
| DPS (p) | – | – | – | – |
| Net cash | 8.4 | 11.6 | 17.7 | 24.2 |
| P/E | 27.4 | 13.9 | 10.8 | 8.9 |
| EV/EBITDA ^ | 10.2 | 6.3 | 4.6 | 3.8 |
| EV/sales ^ | 1.7 | 1.5 | 1.3 | 1.2 |
# including share based compensation & MIP
† tax credits are included in PAT
^ based on current EV of £52m, net of £12m net cash; multiples including forecast net cash are materially lower
Source: Audited Accounts and Zeus estimates
