Domain Holdings’ Stock In Pressure; Witnessed 30 % Price Erosion Since Its IPO

  • Mar 27, 2019 AEDT
  • Team Kalkine
Domain Holdings’ Stock In Pressure; Witnessed 30 % Price Erosion Since Its IPO

Domain Holdings Australia Limited (ASX: DHG) is a real estate media and technology services major. It operates under residential, media and commercial, Agent services, Transactions and others, and Print. The company works closely with advertisers by providing media and lead generation solutions to those advertisers who are on the lookout for promoting their products as well as services to customers. It provides transactional services in the property Lifecycle in the form of publishing magazines and newspapers. The company also offers home loan and insurance brokerage and provides information to buyers, investors, renters, sellers, and agents. The company is headquartered in Pyrmont, Australia.

In the year 2017, Fairfax Media Limited (ASX: FXJ) listed its property business, Domain Holdings Australia Limited (ASX: DHG) by spinning it off from FXJ, and currently Fairfax holds 60 percent shares in DHG.

The market participants who invested in the IPO of DHG have seen their investment go down in value. Since listing, the stock price is down by 32.79 percent as compared to 8.12 percent up-move witnessed in ASX 200. DHC has underperformed its sector peers as well, REA (ASX: REA) has dropped by just 3.03 percent during the same time.

The overall macro-economic scenario for the real estate players has witnessed a downturn in the recent past. The data published by the Australian Bureau of statistics (ABS) points towards a fall in real estate prices and the overall projections for the year 2019 is also not very bullish.

The regulatory conditions also lead to pressure on property prices. The Australian Prudential Regulatory Authority (APRA) had limited the banks lending to thirty percent of mortgages. The overall credit conditions have been tougher. More on this could be read here.

The company in February reported its half-year results and it reported revenue of $186 million in 1HFY19 vs. $112 million in 1HFY18. It reported a total comprehensive loss of $154 million in1HFY19 vs. profit of $440,000 in 1HFY18. The company expects its total costs to increase in mid-single digits against proforma FY18.

Even though the share price moved up post the results, the market participants seem to be not turning too bullish. The primary reason being the underlying real estate market being in a downtrend, especially key markets like Sydney and Melbourne. The pending election is also being closely watched as it may have ramifications on the property regulations.

Stock Information:

The stock has provided a YTD return of 11.71 percent. However, the stock has been in a downtrend in the recent past. The stock has dropped by 30.34% in the past six months.

The shares of DHG settled the day’s trading at A$2.440 on ASX, trading down by 1.613%, (As on 27 March 2019).

Domain Holdings Australia Limited’s (ASX: DHG) market capitalization stands at circa $1.45 billion. The 52-week high price is A$3.640, and the 52-week low price is A$2.060. The company’s EPS stood at -0.269 AUD, as reported by ASX.


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