Shares in Purplebricks (PURP) rose 20 per cent after the online hybrid estate agent reported strong first-half performance. Listed on the Alternative Investment Market (Aim) less than a year ago, the company has made significant progress in capturing market share, with first-half instructions more than doubling and average revenue per customer up by a fifth at £1,000.
The business model centres on the use of local property experts (LPEs) who handle marketing and sales. Extending the network resulted in increased investment, but LPE numbers more than doubled to 329. The group's venture into the Australian market has also started strongly, generating £570,000 of instruction fees in the first seven weeks; a better start than the UK business.
Unlike a conventional estate agent, Purplebricks charges an upfront fee before the sales process begins, and there were some questions over the conversion rate (of fees taken to sales completed). However, a survey revealed that more than 90 per cent had been registered as sold at the Land Registry, with the remainder exchanged but not yet registered, or back on the market.
With a fixed cost base, cash flow is strong, and there was a useful cash balance at the half-year end. Analysts at Peel Hunt are forecasting adjusted pre-tax profits of £4.3m and an EPS loss of 1.2p for the year to April 2017 (from a £9.8m loss and 3.3p loss per share in FY2016).
| PURPLEBRICKS (PURP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 126.8p | MARKET VALUE: | £313m | |
| TOUCH: | 124-126.8p | 12-MONTH HIGH: | 180p | LOW: 73p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 11p | NET CASH: | £29m | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 7.2 | -6.4 | -344 | nil |
| 2016 | 18.7 | -2.8 | -1 | nil |
| % change | +160 | - | - | - |
Ex-div: na Payment: na | ||||
