PEXA shares rocket 15pc as it swings to interim profit, ups annual guidance and buys 38pc stake in Landchecker

The digital property settlement group has nabbed a 38 per cent stake in Landchecker and lifted its annual guidance after swinging to a profit. Shares jump 15 per cent.

PEXA boss Glenn King said the digital property settlement group was performing strongly, with favourable market conditions still evident in the early weeks of the second half. Picture: Jim Rice

PEXA shares surged 15 per cent on Wednesday as the econveyancing specialist announced it had nabbed a slice of property data platform Landchecker and upgraded its full-year guidance.

Predicting a strong two years ahead for the digital property settlement platform, chief executive Glenn King said he expected Australia’s housing market to remain buoyant even amid the threat of rising rates.

“We’re still seeing good performance in the market at the moment ... and we see continued momentum in the second half. If I look at the market dynamics, just generally, I’d expect fiscal 2023 should be a good year as well from an outlook perspective,” Mr King told The Australian.

The property market would be supported by pent-up supply and demand as well as broader inflationary pressures and close to full employment in the economy, he added. Getting migration levels back up would also boost house prices, he said.

“With the country opening up, I only see that (skilled migration) as having a positive impact on the market.

“But say interest rates do go up, then we will people looking to refinance and so that’s a positive for us too. We’re not dependent on price, we’re agnostic.”

PEXA is guiding to around 1.8 million property transactions in the current half, just shy of the record 2.1 million it did for the six months through December 31.

Mr King said momentum was also building in PEXA International, with its UK market entry strategy progressing over the first half. Seven UK lenders have completed testing of PEXA’s settlement platform in recent weeks.

“We aim to get the first remortgage transaction live in October this year ... then we’ll get some more volume coming through in fiscal 2023, and by 2024/2025 we expect to see a bit of scale coming through,” he said.

The econveyancing market leader, operating in an effective monopoly in Australia, swung to a net profit of $9.7m in the first half, up from an $11.3m loss a year earlier, as it reaped the benefits of a booming property market.

Revenue jumped 46 per cent to $145.4m as it boosted its market penetration to 84 per cent, while operating expenses, including cost of goods sold, rose 26 per cent.

Barrenjoey analyst Josh Kannourakis said the result was “a strong beat across all operating metrics, with PEXA’s operating leverage on display.

“UK traction (is) evident with seven banks successfully completing testing in January (key milestone) and on track for go-live in the fourth quarter.”

The ASX-listed group now expects annual revenue of between $265m and $275m, up from its previous guidance of $246.9m. It expects annual net profit to come in between $55m-$65m, a 62 per cent jump, at the midpoint, on the $37m outlined in the prospectus.

PEXA is also actively looking to move into the Tasmanian and Northern Territory markets, Mr King said, as he tipped a potential launch in one or both of the juridictions by late 2023 at the earliest.

Commenting on the 38 per cent stake in Melbourne-based Landchecker, he said it provided PEXA exposure to the fast-growing data insights market.

“The market is rapidly changing around data and insights in terms of open data and data services; services that can be used across numerous segments,” Mr King said.

The investment would also diversify PEXA’s revenue base and could deliver partnership opportunities between PEXA, Landchecker, and RACV, which has a 51 per cent stake in the property data platform, he added.

Landchecker is used by prospective homebuyers and property professionals to gather data on a property. Property information is updated daily and used by state government and local councils, among others, PEXA said.

The investment was made through PEXA’s data and analytics division, PEXA Insights.

“Landchecker is PEXA Insights’ first strategic investment. Like PEXA Insights, Landchecker’s data is trusted and used by thousands of property professionals every day.

“We aim to provide a richer service offering to our customers, and we believe that the synergies between the two companies will enhance PEXA’s position as the trusted resource for robust, real-time data,” PEXA’s chief data and analytics officer Scott Butterworth said.

PEXA shares rocketed to as high as $19.60 in afternoon trade before closing up 13.9 per cent at $19.38.