RESEARCH: Domacom, New Products To Further Bolster FuM Growth

FYI | Jun 25 2020

Pitt Street Research suggests a re-rating is on the cards following successful product launches and resultant growth in FuM

By Pitt Street Research

DomaCom Ltd ((DCL)) is back on track with respect to growth of its funds under management (FuM) after a period of subdued activity during Q3 FY20.

DCL’s FuM registered strong quarterly (~10%) and yearly growth (~37%) and reached $70.9m as of May 2020.

This is a noteworthy development considering that it was achieved against the backdrop of unfavourable economic conditions.

We believe that the new product launches in the pipeline will continue to support the growth trajectory of DCL’s FuM in future.

Focus on launching four new products in 2020

Management is targeting the launch of four innovative products this year catering to different real estate investment needs.

The first transaction of the Rent-to-Own offering is already in progress. The Essential Worker and Equity Mortgage offerings will be launched by Q3 and Q4 CY20 respectively, and the Senior Equity Release product is getting a lot of investor attention, especially from self-funded retirees whose incomes have diminished during the current downturn.

DCL is well capitalised to support its products launch plans as it raised $6m in 2019 and has negotiated an extension of convertible notes worth $3.6m in May 2020.

Reiterating valuation of $0.30–0.41 per share

FuM is showing promising growth which leading us to reiterate our previous valuation of $0.30–0.41 per share based on a DCF approach.

We believe that successful product launches and resultant growth in FuM should drive a re-rating of the stock.

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