This morning fractional property investment company Domacom Australia Ltd (ASX: DCL) announced it has agreed a deal with financial technology software business Iress Ltd (ASX: IRE) to integrate its property sub funds with Iress's XPLAN financial planning platform and software.
Domacom is a technology platform that lets retail or SMSF investors buy fractional interests in commercial or residential property and theoretically benefit from upwards revaluations in the underlying properties over time. As at 30 September 2017 it had $24.8 million in property funds under management, with another $8 million of funding in progress.
However, revenues for the quarter ending September 30, 2017 were only $23,000 and the company is forecasting a cash outflow of $1.3 million for the quarter ending December 31 2017. Given the company had cash on hand of just $2 million as at September 31 2017 it is actively looking into new debt, equity, or hybrid funding sources to shore up its capital position.
This afternoon the stock sells for 10.5 cents and looks extremely speculative, with a market cap of just $11.8 million.
Iress on the other hand is one of Australia's leading fintech businesses and probably its most established via the software it provides mainly to buy side fund managers among other financial service professionals.
Its XPAN software and technology platform is also widely used by financial advisers to manage clients' investment portfolios and administrative needs.
Over calendar year 2017 however management failed to control costs at the business with the group now forecasting almost no profit growth, despite revenues growth forecasts in the region of 12%-13%.
The stock is off 1% over the past year and still trades on relatively expensive multiples in reflection of investors' expectations that 2018 may be the year management is able to deliver some healthy profit growth. I would rate it as closer to a sell than a hold on current valuations, with the shares changing hands for $11.70.
