HomerAI And Market Expansion Will Shape Real Estate Deals

Key Takeaways

• Strategic use of technology and AI-driven solutions is set to boost revenue through enhanced customer engagement and transaction efficiency.
  
• Expansion into high-value markets and cross-selling opportunities aim to improve revenue per transaction and long-term growth.
  
• Heavy investment in technology and high operating expenses might delay profitability, while growth depends on risky geographic expansion and market share initiatives.

Catalysts

Operates as a data and technology-driven property technology company in Singapore and Malaysia.

• Ohmyhome's strategic use of technology, such as their HomerAI platform and other AI-driven solutions, is designed to streamline real estate transactions and enhance customer engagement, leading to expectations of increased revenue through higher conversion rates and user acquisition efficiency.
  
• The company has demonstrated significant revenue growth and margin improvement across all business units, including renovation and property management, with further cost optimizations anticipated to bolster earnings by reducing operating expenses over time.
  
• Ohmyhome's acquisition of the property management business has expanded its customer base, allowing for increased cross-selling opportunities and a steady stream of recurring revenue, which could enhance long-term revenue growth projections.
  
• The company is expanding into higher-value markets, such as high-end renovations and condominium management, which are expected to contribute to higher revenue per transaction and improved net margins as they cater to higher net worth clientele.
  
• Ohmyhome's founders are showing confidence in the company's future growth by converting their salaries into shares, signaling to the market their commitment and belief in the company’s ability to enhance shareholder value through sustained business growth and earnings improvements.

Ohmyhome Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Ohmyhome's revenue will grow by 24.1% annually over the next 3 years.
• Analysts are not forecasting that Ohmyhome will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Ohmyhome's profit margin will increase from -39.8% to the average US Real Estate industry of 4.3% in 3 years.
• If Ohmyhome's profit margin were to converge on the industry average, you could expect earnings to reach SGD 886.6 thousand (and earnings per share of SGD 0.04) by about July 2028, up from SGD -4.3 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 1307.3x on those 2028 earnings, up from -9.4x today. This future PE is greater than the current PE for the US Real Estate industry at 31.0x.
• Analysts expect the number of shares outstanding to grow by 3.46% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.74%, as per the Simply Wall St company report.

Ohmyhome Future Earnings Per Share Growth

Risks

• The company is still incurring losses and relies heavily on investment in technology, which might delay profitability and impact net margins.
  
• Operating expenses remained high due to recent acquisitions, which could continue affecting the net income negatively in the short term.
  
• The company's growth largely depends on increasing market share and geographic expansion; however, execution risks in these initiatives could impact revenue projections.
  
• Cash flow improvements have been attributed to increased activities in brokerage and renovation, but any downturn in these areas could adversely impact cash balances and operational liquidity.
  
• There is uncertainty in the valuation multiple for the company compared to industry peers, which could affect market perception and influence the share price adversely.

Valuation

• The analysts have a consensus price target of SGD29.0 for Ohmyhome based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be SGD20.8 million, earnings will come to SGD886.6 thousand, and it would be trading on a PE ratio of 1307.3x, assuming you use a discount rate of 7.7%.
• Given the current share price of SGD1.38, the analyst price target of SGD29.0 is 95.2% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.