Who Would Choose Scrip in an Unlisted Vehicle over Cash?

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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Event-Driven

&nbsp;Our AUD 4.50 per share fair value estimate on iProperty Group is predicated on our positive view of its long-term growth potential. The firm boasts lead positions in the online property classifieds markets of Malaysia, Hong Kong, Thailand, Indonesia--the growth in its operating metrics (paying agents, listings, registered users) has been impressive since 2010. Furthermore, iProperty has just turned operating cash flow positive&mdash;a critical inflexion point which is usually followed by substantial earnings leverage, if iProperty can maintain its leading positions.REA Group, Australia's dominant online property classifieds operator, has now decided to capitalise on this inflexion point, announcing a AUD 4.00 per share cash offer for 77.3% of iProperty shares it does not already own. In our view, REA Group's operating knowledge and financial muscle will be of immense value at this critical juncture of iProperty's development, helping the firm to develop a network effect. This prized intangible quality is a precursor to establishing a moat around iProperty's portal businesses&mdash;something REA Group enjoys in Australia and is keen to replicate in the fast-growing Asian online property classifieds space.We maintain our AUD 4.50 per share fair value estimate for iProperty, pending the release of the scheme booklets next month. We'll provide our recommendation well ahead of the shareholder vote in late January 2016. Shares in iProperty are approaching REA Group's AUD 4.00 per share offer price but remains below our fair value estimate.Analysts:&nbsp;Gareth James &amp;&nbsp;Daniel Mueller

&nbsp;Our AUD 4.50 per share fair value estimate on iProperty Group is predicated on our positive view of its long-term growth potential. The firm boasts lead positions in the online property classifieds markets of Malaysia, Hong Kong, Thailand, Indonesia--the growth in its operating metrics (paying agents, listings, registered users) has been impressive since 2010. Furthermore, iProperty has just turned operating cash flow positive&mdash;a critical inflexion point which is usually followed by substantial earnings leverage, if iProperty can maintain its leading positions.REA Group, Australia's dominant online property classifieds operator, has now decided to capitalise on this inflexion point, announcing a AUD 4.00 per share cash offer for 77.3% of iProperty shares it does not already own. In our view, REA Group's operating knowledge and financial muscle will be of immense value at this critical juncture of iProperty's development, helping the firm to develop a network effect. This prized intangible quality is a precursor to establishing a moat around iProperty's portal businesses&mdash;something REA Group enjoys in Australia and is keen to replicate in the fast-growing Asian online property classifieds space.We maintain our AUD 4.50 per share fair value estimate for iProperty, pending the release of the scheme booklets next month. We'll provide our recommendation well ahead of the shareholder vote in late January 2016. Shares in iProperty are approaching REA Group's AUD 4.00 per share offer price but remains below our fair value estimate.Analysts:&nbsp;Gareth James &amp;&nbsp;Daniel Mueller

Iproperty

iProperty Group in Demand