The company recently announced that is has delivered another quarter of record cash flow collections and continuing positive operating cash flow. The company recorded highest ever collections of $8.5 million an increase of more than 48% over the prior corresponding period and an increase of approximately 1.4 million dollar over the first quarter of 2015. Collections were up in every country of operations. In the previous quarter the company did collections of $7.9 million, which was a record for that quarter. 
 

IPP Cash Collections (Source - Company Reports)

The Group managed to record a strong positive net operating cash flow of $ 0.65 million for the quarter, despite the introduction of the GST in Malaysia, which had a one off effect on net operating cash flow, reducing it by $ 0.13 million. The continuing strong cash flow is a reflection of the significant growth the business has experienced over the last few quarters. The company is expecting to continue the exceptional growth trajectory through the remainder of 2015. .
 
iProperty.com has clear leadership along all segments in Malaysia. Asset base of the business continues to grow with an  increase of 18% in customers during 2014. The agent business dominates the market, with almost all agents being signed up (9,900 agents). The business also have over 200 developer clients representing 67% of the market.
 
The business in Hong Kong serves a large consumer base of local developers and international developers. A strong focus on key account management resulted in a 28% increase in developer online revenues over the prior years. The business is also dominant with agents as 909 agencies now subscribe to Gohome and vProperty, up from 871 in 2013. Our leadership position was evidenced by the 20% price increase in July 2014, despite the soft market conditions. This factor, together with the acquisition of Squarefoot resulted in a 123% increase in ARPA to HK$168 (from HK$75).
 
In Indonesia Rumah123.com is the number one portal for real estate developers and enjoyed substantial growth in market share due to significant increase in the number of developers in 2014. The agent business is number one in this market as measured by revenue, number of paying agents, listing ARPA and leads. Paying agents grew by 30% to more than 10,000 at the end of the year. Similarly property listings grew by 40% to 335,000; which is approximately 20% more than the number 2 competitor. The business also put through a successful price increase in July 2014 for depth products of 50%. The company is also a strong competitor in the Singapore market with 8,500 developers.  However two third of these developers are in freemium model.


IPP Daily Chart (Source - Thomson Reuters)

The group continues to pursue a similar strategy in the countries in which it operates which consists of attracting and signing a critical mass of agent customers to provide content, in the form of listings, for our property portals; attracting and retaining consumers to our websites who are a source leads for our customers; and, signing and developing deep relationships with property developers and other display advertisers. Each of the market is in different stage of development and superior customer servicing is key to success in each of the markets. The company is committed to a Mobiles first approach across platform. Also critical is constant product innovation, like Android apps for a superior customer experience.
 
In June 2015 the company increased its guidance for 2015. The range of guidance for both revenue and EBITDA was increased based on the ongoing growth of the business. For 2015, the company now expects revenues of $32.5 million to $36 million and EBITDA of $3 million to $6 million. These follow some positive trends seen in 2015 like, growth in total income to $21.8, which is an increase of 15%, limited growth of operating expenditure to 1% and entry into the Thailand market by acquiring the profitable number 1 player in the market. The company also improved its EBITDA from a loss of $2.9 million to a loss of $0.4 million, due to start up losses in the transaction business.
 
We expect the share price to do well as the company continues to demonstrate strong profit growth. However, IProperty is still in the early stages of a long-term growth trend so has a lot to achieve in the coming years. We assume revenue will grow at a compound annual growth rate of more than 20% during the next five years as real estate advertising transitions in Southeast Asian countries, away from traditional print media towards online media. iProperty is well positioned for this trend with leading market positions in Malaysia, Hong Kong, Indonesia and Thailand. We like the IPP story and put a BUY recommendation on the stock at the current price of $2.38.

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