McGrath given $253 million to $324 value by JP Morgan

McGrath given $253 million to $324 value by JP Morgan
McGrath given $253 million to $324 value by JP Morgan

JPMorgan has suggested the McGrath estate agency had a $253 million to $324 million enterprise value, according to research sent to fund managers, and seen by the Australian Financial Review.

The investment bank's multiples-based valuation applied an 8 times to 10 times range to pro-forma FY16 EBITDA of $31 million.

The report comes after Bell Potter put a $266 million to $315 million enterprise value on the business, as revealed by the authorative AFR Street Talk column on Monday. 

JPMorgan's told clients McGrath was one of the leading real estate services brands in Australia with 7.2% market share in New South Wales, 5.4% in the Australian Capital Territory and an emerging 1.3% presence in Queensland. 

It argued McGrath had a premium brand, business model and culture to attract and retain talent. 

JPMorgan forecast McGrath to record $141 million revenue in the 2016 financial year, on a proforma basis, and $18.2 million net profit. 

The broker compared McGrath to companies including the UK's largest real estate services group Countrywide, Foxtons Group and United States based Realogy and RE/MAX. 

McGrath Limited has recently applied for the McGrath Operations Limited name with ASIC as well as share paperwork lodged with authorities earlier this month.

McGrath's real estate group is seeking to come to stockmarket with 67 company and franchise offices, having grown from 22 in the 2009 financial year. 

McGrath agreed to buy 10 Sydney offices controlled by Shane Smollen earlier this month.

The AFR suggested that fund managers will be seeking to test the reliability of McGrath's forecasts given the cooling in the Sydney property market, but noted the company has been able to consistently grow profits through various property cycles.

McGrath had a property sales volume of 16 per cent a year, compounded, in the five years to 2015, which included periods of downturn in the Sydney market.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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