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OnTheMarket Plc

INTERVIEW: Why OnTheMarket plc could see a very sharp movement in share price

OnTheMarket plc (LON:OTMP) is the topic of conversation when Zeus Capital Research Analyst Robin Savage talks to DirectorsTalk. Robin summarises the key points to his 28 page note on the company, explains what we can expect from the trading update due 31st Jan and how investors can judge the value of the company shares.

Ahead of OnTheMarket’s financial year end on 31 January, Zeus Capital updated their forecasts to reflect the actual allocation of agent recruitment shares: they reduce the average shares in issue for FY19E by 15% and for FY20 by 12%. By January 2020 they expect full allocation of recruitment shares to agents signing long-term contracts to be complete.

Zeus Capital Valuation

Equity value/office. In our opinion equity market value per office is a useful indicator. At 83p a share OTM has over 12,000 offices and is trading on an equity market cap of £51m (i.e. only £4.25k/office; Rightmove is trading on £230k/office), which does not reflect the value of these relationships which we estimate to be more than £20k/office.

The allocation of over 35m shares to agents should secure long-term agreements with high quality agents.

By 2020-21, with the portal delivering an EBIT margin of over 30%, we would expect OTM to trade on over £20k/office, which would be consistent with a fully diluted share price of over 300p a share.

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