Thursday, December 13, 2007

Can the Joneses keep up with the market?

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The Joneses will have to work hard to satisfy stockmarket
investors that theirs is a company worth investing in to
make the IPO a success.

A dearth of IPOs in New Zealand so far this year and what we have had has mostly been unmitigated garbage.

News released yesterday that The Joneses , the cut price real estate agent, is going to list on New Zealand Exchange's alternative market, in mid-February 2008 piqued my interest somewhat.

Now I guess your initial reaction might be hell, I don't trust real estate agents, and you could be forgiven for thinking that but I can see some promise in the idea that the owners of the Joneses', TJRE Holdings and director Chris Taylor have.

Kiwis have no listed exposure to the residential property market and we just love to invest in residential property, at the expense of the sharemarket mind, but what an opportunity to combine the two aspects.

The company is very small and has been operating since last year, with offices in Dunedin, Christchurch, Auckland and Wellington, so the possibility for good growth is there.

Revenues from house sales commissions are estimated at NZ$1.2 billion, with Barfoot and Thompson in Auckland taking up the bulk of that. The revenue is certainly there so it is a case of the Joneses upping their ante to keep up with the Barfoots and LJ Hookers of this world.

In the absence of more details of how the company is structured and how revenue is made, presumably through a cut of the sales commission, one cannot make a serious decision to plunk any shekels down yet.

Time to look at the industry and see how this model might work/fail if you want to invest.

Bring on the prospectus.

Related Share Investor reading

IPO quality indicative of poor economy
The Joneses Real Estate business fails to keep up with market conditions

C Share Investor 2007