Fairfax Media Limited (ASX: FXJ) shares fell more than 30% this morning as its online real estate business Domain Holdings Australia Limited (ASX: DHG) listed separately and began trading on the ASX at midday today.
No initial list price for Domain had been set, as eligible shareholders received one Domain share for every ten Fairfax shares held. Fairfax has retained 60% ownership of Domain, and there has been broad debate as to how high the market would value the new listing.
According to an official ASX market release, there are just under 575 million Domain shares on issue; giving the company a market capitalisation of around $2.225 billion using the recent share price of $3.87.
This suggests the company is trading at around 26x the FY2017 pro forma historical EBIT of $86 million stated in the Domain separation scheme booklet.
By way of comparison, market-leader REA Group Limited (ASX: REA) has a market capitalisation of around $10 billion and posted statutory EBIT of $156 million for FY2017, though this figure was significantly affected by a one-off impairment charge of $182 million.
