Purplebrick Group Plc (LON:PURP) AGM trading update confirms that it has made a “strong start” to the current financial year to 30 April 2018 and “trading in the UK and Australia remains on course to meet full year guidance provided at the Final results in June: revenues of £80m for the UK and £12m for Australia”. Net cash at 30 August 2017 was £65m.
Interim results to 31 October, due on 13 December, should be impressive:
* UK – 19% growth in LPEs in the past 3 months
LPEs have increased to 640 (June 2017: 540);
Revenues probably “more than double the same period last year”;
* Australia – 30% growth in LPEs in the past 3 months
LPEs increased to 100 (June 2017: 77);
Revenues will be “many times ahead” of last year;
* US – “ahead of plan”, “encouraging initial response”
“Website visits and valuation booked exceeded both UK & Australia at the same period in their development”;
“First buy-side mandate soon after launch went live”.
The CEO’s commentary refers to “the culture and breadth of talent within [Purplebricks]”, the continued investment in “infrastructure and team to support [the group’s] rapid growth, while [management’s] focus will remain on providing an excellent customer experience.”
Zeus’ view
This update confirms that Purplebricks Group Plc is growing fast. Purplebricks UK, the UK’s largest estate agent, is 7 months ahead of our forecast in terms of LPE recruitment: this is good preparation for the Spring housing market. The Australian and US business units are developing faster than the UK (at the same development stage).
Valuation considerations
Now is a good time to consider Purplebricks’ prospects, with its shares down 21% over the past 2 months in a flat equity market. (1) Purplebricks UK is growing very fast and profitably. (2) Purplebricks Australia is on track to breakeven in November 2018 (after 15 months trading) and will be a similar sized unit to Purplebricks UK. (3) Purplebricks’ USA, which is developing more quickly than either the UK or Australia, has the potential to be many times larger than the rest of the group.
