Rent.com.au Ltd: RentPay Launched, Transactions Transition Begins

Equity Bottom-Up

317 Views07 May 2021 08:00

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SUMMARY

Rent.com.au Ltd

RentPay launched, transactions transition begins

Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through their rental profile, rental bond and payments and through a growing number of aligned transactional services. Rent.com.au has just launched RentPay in both the Apple and Google stores with the initial focus on providing Australia’s 2.5m renting households with flexibility and control over when they make their rent payments. In addition to the previously announced SafetyNet feature which provides renters with a short-term loan to cover their rent if they are unable to, the new platform also includes a unique feature, ScoreBuilder, which will report RentPay’s customers’ account status each month to a credit reporting agency. This may, over time, be a positive contributor to renters’ credit scores. The launch today is just the first stage of a plan to deliver a platform of transactional services designed to make renting easier and more streamlined. Additional partnerships are likely to emerge with utility companies – gas, electricity and telcos, insurance companies and financial institutions as well as retailers. The company noted that its internal target is to achieve 200,000 paying RentPay customers by 30 June 2023 which equates to just under a 10% share of the rental market. To put this into context, our forecast is for RentPay to secure a 5% share of renters on the platform by June 2023 and 20% by FY30. This underpins our $0.35/share base case DCF valuation.

Business model
Rent.com.au generates revenue from advertising and from rental products, with revenue for the latter derived from RentCheck, which verifies a renter’s identity and checks their record against the National Tenancy Database, from RentConnect which delivers an integrated utility connection and $100 gift card to renters in conjunction with AGL, and from RentBond, RNT’s “move now pay later” product which helps renters bridge the gap from one rental property to another by financing their bond online. The company’s newly-launched RentPay app platform allows renters total financial flexibility in terms of how they make their rent payments while giving agents and landlords surety of payments on time. It also aligns Rent.com.au to the tenancy period, giving it an opportunity to engage with its audience for longer and extend the relationship into other revenue lines including insurance, telecommunications, loan and finance products.

Developing new income streams
Rent.com.au has launched its new transactional platform RentPay on the Apple and Google stores. Renters are able to download the app and activate for an initial one-time fee of $3 and an ongoing $2 monthly fee to synchronise payments transfers. RentPay has also launched with the previously announced SafetyNet short-term loan offer and a new unique feature, ScoreBuilder, which will allow renters to build a credit score based on their RentPay account. This feature has an initial set up fee of $3 and $1 per month ongoing. The included SafetyNet feature is available after a 30-day qualifying period with no additional charges until funds are drawn, at which point $4 per fortnight is payable until the funds are repaid. No interest is charged. Rent.com.au estimates it can secure 200,000 customers, or 10% market share by June 2023.

Base case DCF valuation of $0.35/share unchanged
Our base case DCF valuation for Rent.com.au is $0.35/share. Our valuation is predicated on our expectation that Rent.com.au’s new flagship platform RentPay will secure 5% of renters by FY23 and 20% by FY30. In our view this is entirely achievable.

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