The thing I've seen with all big winners in the internet space is it comes down to having the best network with the stickiest features. So with LEJU you have partnerships with Baidu / Tencent-Weixen-Weibu / Sina and now with Zillow. And the best part is no one else has that. Those are huge tentacles reaching all throughout the internet, making their network stronger and stronger and making the user experience better. It seems to me that the writing is on the wall. Add in the fact that their float is like 8 or 9 million shares and it it only a matter of time before LEJU takes off like a bat out of heck.
Yeah I think it was a great point. Think about the established businesses that have been around for decades that have been turned on their head by the internet. I think the real estate agency business is in jeopardy...at least the offline business. I think that will all move online. Brokers can set up portfolios of all of their properties, maintain communications, offer coupons, etc all directly from their custom page on LEJU or in the US on Zillow. There's no reason why these guys wouldn't just take over the brokerage business over time. That's why the huge multiple is baked into Zillow.
The potential for that business is monstrous. I think I read the agency business is like $110 Billion in the US. Who knows what it is in China but new home sales were 12 Million in China last year vs I think around 1 Million in the US.
I'm still really shocked at the valuation disparity between LEJU / Z. I still say there's a reason Zillow did an exclusive partnership with LEJU over all of the other options they had, including SFUN. I think LEJU could take over a big chunk of SFUN's listings business as well.
One thing I saw on Stocktwits that I thought was a great point: Zillow & LEJU are replacing the need for real estate agents or perhaps over time will become the real estate agents. I think it's worth considering just what these businesses could become if they end up taking a piece of every transaction like real estate agents do now. The information provided through online platforms like Zillow & LEJU is so much greater than what was provided by agents in the past so it makes sense that the majority of people would gravitate toward the use of these platforms. Maybe they will make a push into becoming agents over time. Definitely an interesting topic because those markets are ginormous.
I'm arriving at a 30% margin given the huge operating leverage the company has after they roll out their technology platforms. Also, this doesn't include any potential increases in home prices over time nor does it include any increases in the price per coupon (which has risen recently), both of which would have an impact on total revenues. While sales prices are soft recently, they're still increasing year on year.
Well they did a run rate of 140k redeemed coupons vs a new home sales total of 12 Million in 2013 so its 1.17%. I think they can get to 10% given the desire by developers to boost sales to reduce inventory and LEJU should capture the lions share of that...say 80% (of the 10% penetration rate)? That means potentially $2.5 Billion on revenues on that. They should have a 30% net margin on those revenues which translates into $750 Million in net income. Right now LEJU trades at a $1.5 Billion market cap. Who knows what it would trade at if people stopped valuing it at 10X EPS. Maybe it would trade up to 30X at the peak? That would be $165 a share.
Couple of other things to keep in mind:
(1) They should capture a good chunk of the listings / advertising business from SFUN given their partnerships with BIDU / Tencent / SINA / Zillow and that's not factored in at all.
(2) The new home sales market should theoretically increase over the longer term as population growth (aided by no 1 child policy) boosts property demand.
Thankfully the e-commerce arm of LEJU is only 1% penetrated so even if the property market shrinks over the next few years there is a massive untapped market sitting there.
ksn - actions speak louder than words. The fact that Zillow chose LEJU exclusively over any other company (including SFUN) speaks volumes. I think LEJU is a hidden gem and EJ will benefit nicely. Can you imagine what LEJU (and therefore EJ) would be trading at if it was located in the US? $100?
You're right. They had 120,000,000 shares before the IPO and issued 11,500,000 to the public and another 2,029,420 to Tencent. The new shares outstanding are 133,529,420.
Market cap is 133,529,420 x $11.66 = $1.557 Billion. Estimates are for $0.74 and $497 Million Revenues. Company estimated revenues at $500 to $525 Million last quarter so there could be some upside there.
Yeah kind of hard to compete when everything is moving online and leju has partnered with weixin / weibo / Baidu / sina
I say go ahead and go after the real estate agencies while LEJU goes after mobile and the future of real estate with it's partnerships with Zillow and Tencent. I think it's a waste of money to focus on anything else.
"Seattle-based Zillow noted Chinese buyers spent more than $11 billion on U.S. properties, spending an average of $425,000 per home, with 69% of them being all cash purchases. "
Again, which bankers are lining up to handle these people directly so they don't have to do research about a place halfway across the world beforehand?
Huh? Do you know what the medium home price is? You know that you don't need to put 100% down right?
Now let's say you're right and you must use 100% cash (or 5X what you need to put down for a 2nd home) and that the average price is $1 Million (or 4x the actual medium price)...you're implying that this type of buyer has their own bankers lining up to help them out, right? you're implying that a person with say $2 Million has multiple bankers here in the US lining up to help them find a home and that they don't do any online research of a place halfway across the world from them, right?
I don't even know how to respond to that. So I'm taking it you think only billionaire Chinese people buy homes and the partnered website is only in English and doesn't list any bilingual brokers?
Beginning in early summer 2014, Leju visitors who search for U.S. properties will be brought to a Zillow®-Leju co-branded website whereby they will have access to Zillow's robust home search experience, rich data on homes, millions of for-sale listings, and unique pre-market inventory. The co-branded site will be translated into Chinese and operated by Zillow (Z).
There was a Russell (small caps) rebalancing that occurred at the close on Friday and forced a lot of big moves in many stocks. I wouldn't read into it too much.
Not sure its about to fly but I could see rates rising over the summer. The Brazilian iron ore market should open up which will increase capesize rates over the 2nd half as shipments from Brazil to China are longer and will drive higher rates. BALT has extreme leverage to higher rates so they should benefit. But I don't see rates ready to fly. India will help longer term and should offset some of the slowdown in the growth rate of demand for coal.