PropertyGuru – Poised to take its plans forward June 17, 2022

Background

PropertyGuru, founded in 2007, is Southeast Asia’s leading property technology company. It revolutionised the real estate market in Singapore by taking property search online (since the platform was launched), enabling transparency and convenience for property seekers. Traditional classified property ads are now a thing of the past as PropertyGuru has emerged as the preferred solution¹.

PropertyGuru Group has since expanded its business throughout Southeast Asia and helps over 38 million property seekers identify their ideal home each month, across Singapore, Malaysia, Vietnam, Indonesia and Thailand².

Over the years, the Group has developed immensely as a technology company, boasting a robust portfolio of leading property portals including; award-winning mobile Apps, a mortgage marketplace, PropertyGuru Finance and FastKey, a premium feature for product placement.

NYSE debut

PropertyGuru (PGRU) went live on the New York Stock Exchange (NYSE) on 18 March 2022 via a special-purpose acquisition company (SPAC) merger with Bridgetown 2 Holdings Ltd; a blank-cheque company backed by billionaires Richard Li and Peter Thiel³.

Performance

The proptech company generates revenue from various ways. For agencies, PropertyGuru has a recurring revenue model in Singapore, Malaysia, Indonesia and Thailand, where annual subscriptions and tiered packages are offered, as well as product depth. Diversely, a pay per listing model is offered only in Vietnam⁴.

In terms of developers, the company generates revenue through digital advertising by providing banners and content marketing meant for project launches. Furthermore, PropertyGuru conducts events and award ceremonies to gain revenue through marketing packages, ticket sales, sponsorships and booths.

Lastly, for financial institutions, commissions are gained from mortgage fulfilment, along with digital advertising for products through sponsorships and banners⁵.

In 1Q2022, revenue growth has been strong across all business segments as PropertyGuru recorded an increase in total revenue by 42% YoY to S$28.2 million. Adjusted EBITDA was S$0.9 million which is S$3.7 million improved YoY as the group managed costs well⁶.

Specifically, marketplaces revenues rose by 41.7% YoY:

Singapore Marketplaces revenue rose 23.8% on the back of increased premium product adoption, an increase in subscription price set in 4Q2021 and a healthy renewal rate of 79% for agents
Malaysia Marketplaces revenue saw the biggest growth as it rose 192.3% to S$5.4 million, increasing from S$1.9 million in 2021. This was mainly due to the company’s acquisition and integration of the iProperty business in Malaysia
Vietnam Marketplaces revenue rose by 18.6% , springing from a 2.4% growth in average revenue per listing (ARPL) and a 14.6% jump in the number of listings

PropertyGuru has a strong balance sheet for 1Q22 on the back of its NYSE listing, with the company reporting a cash balance of S$369.5 million, up from S$70.2 million in December 2021⁷.

PropertyGuru projects its 2022 revenue growth of up to 44% and a positive adjusted EBITDA for the full year.

Mergers & Acquisitions Opportunities

August 2021: PropertyGuru acquired REA Group’s Malaysia and Thailand property portal businesses – iProperty.com.my and Brickz.my (Malaysia) and thinkofliving.com and Prakard.com (Thailand). This has reduced competition in both countries⁸
18 March 2022: PropertyGuru completed its previously announced partnership with Bridgetown 2 Holdings Limited – a special purpose acquisition company, with the intention of funding to be directed towards M&A opportunities. The accounting adjustments of this move contributed to a net loss of S$120.3 million for 1Q2022. However, focusing beyond property marketplaces, and into data software services and fintech, the total addressable market (TAM) is at US$8.1b⁹

Long-Term Market Opportunities

The ASEAN Development Outlook (ADO) says that the 10 ASEAN countries have a total combined GDP of US$3.2 trillion in 2019, making Southeast Asia well on its way to become the fourth largest economy in the world by 2030¹⁰.

PropertyGuru has 3 key tailwinds; urbanisation, a rising middle class and digitalisation¹¹.

A study conducted by the Financial Times in March 2019¹² revealed that Asian economies (combined) were forecasted to outpace the rest of the world by 2020, indicating the rise of Asian urbanisation. By 2050, the urban population in Asian cities is expected to increase by 233% more than the rest of the world’s cities combined. Moreover, as of 2020, Asia is home to half of the world’s middle-class – a region which spends more than any other¹³.

Similarly, a study from the World Economic Forum in February 2022¹⁴ revealed that digitalisation is reshaping Asia. The continent now accounts for nearly 60% of the world’s online retail sales. Asian-Pacific e-commerce is expected to (almost) double by 2025, reaching US$2 trillion according to Euromonitor International¹⁵. Many Asian countries are leading globally in certain sectors of digitalisation, with Philippines and Malaysia being the top two countries in e-commerce retail; recording growth rising by 25% and 23% per year respectively. Retail technology became the third highest growing e-commerce category in Southeast Asia during the COVID-19 pandemic, recording growth of 45.9%¹⁶.

With a large number of people moving from rural to urban areas in Asia driving the need for property, the rise in Asia’s GDP coupled with more being able to purchase property resulted in a decline in multi-generational living. Coupling these factors with the recovery from the COVID-19 pandemic state (with borders reopening), PropertyGuru stands at an advantage point, providing opportunities in the region’s property market, as an increasingly wealthy and digital-first population seek properties throughout the region.

Also, Joe Dische, PropertyGuru’s Chief Financial Officer mentioned during a webinar organised by Phillip Securities Pte Ltd on 1 June 2022 that PropertyGuru’s FinTech in Singapore aims to enable frictionless home financing as a mortgage broker by harvesting leads from their agents and website and helping people to find the right mortgage for them. To date, the company has originated over S$2 bn worth of loans and is moving into refinancing and insurance¹⁷.

In the future, Dische mentioned that the company will white label products and potentially have their own fully functioning mortgage products. This service is currently only available in Singapore but there are opportunities to spread it across the region especially in Vietnam, enabling plans for product innovation to continue.

Dische also said that a new Managing Director of Data Services Business had been hired to drive growth and improve the enterprise software experience¹⁸.

Key Takeaways

PropertyGuru has seen steady growth in revenue for 1Q22 and reported a strong balance sheet after its listing on NYSE.

Taking into account the cash raised from the SPAC merger with Bridgetown 2 Holdings aimed at M&A opportunities, along with a solid overall Total Addressable Market (TAM) of US$8.1 billion across five markets in Southeast Asia, the proptech company is poised to take its plans forward.

Targets for the Agents side include driving Average Revenue Per Agent (ARPA) growth through depth products, increases in pricing or new product differentiation in the company’s developed markets and acquiring new agents in other markets such as Thailand and Vietnam. On the aspects of developers, the company has a wide range of tools to facilitate the offline-to-online migration for markets in Thailand and Vietnam.

Lastly, in the near term, the company’s TAM expansion focuses on FinTech through mortgage and property insurance, as well as data services offering valuation and consultancy services. On the other hand, there are plans to focus on developer operating systems and home services in the longer term¹⁹.

To view a recording of Joe Dische’s PropertyGuru Guest Presentation Webinar, please visit: https://www.youtube.com/watch?v=5rRRjSWXXMQ

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