Domain Holdings Australia Ltd (ASX: DHG) was divested from Fairfax Media Limited (ASX: FXJ) mid-November and is now listed as a separate entity on the ASX.
Spin-offs are always worthy of investigation and Fairfax Media has retained a 60% holding in the company, with shareholders receiving 1 Domain share for every 10 Fairfax shares held.
This will allow management to focus on Domain's growth strategies and choose a capital structure that is appropriate for the company.
Domain is a real estate media and technology services business focused on the Australian property market. Its product suite includes; digital listings portals, print magazines, real estate agent services, and transactional services.
Now Domain is on its own it can be priced as a new media company and not be weighed down by old media sentiment.
Domain is working on its mobile platform, which will be critical to its success, as most of its leads are now from mobile devices and these have grown 18% during the year. Total app downloads were up 19%.
Domain revenue was up 8.1%, with digital revenue up 18.8% for the full year.
Sydney property prices are cooling slightly, down 1.3 % in the three months to November. Melbourne was more resilient up 0.5%, and Perth has increased 0.2% in November.
The fact that the property market is flattening out does not necessarily mean it's bad for Domain. Listings have actually been down and now that prices have flattened out more sellers are returning to the market.
Total listings for the year to June 17 across the nation were up on the previous year.
Domain is smaller and nimbler than its main competitor REA Group Limited (ASX: REA), which has a market cap of $10 billion vs $2 billion for Domain, so this should allow for faster earnings growth.
Looking ahead, two main factors in Domain's growth strategy are working well, with mobile engagement and leads up and expanding agents and listings coverage.
The shares listed at $3.80 and after falling, have drifted sideways, to the current price of $3.45. The company has a P/E of 30 compared to REA with 50.
In recent years Domain has expanded its offerings to include other transactional services available to consumers at different stages in the property lifecycle, including home loan brokerage, residential and commercial utilities product comparison, and home improvement.
CEO Anthony Catalano has headed Domain since 2013, overseeing good growth in that time and with growing mobile leads alongside expanding agents and listings coverage the outlook for further earnings growth looks good.
