Trade Me Group, New Zealand's largest auction website, will probably lure back real estate listings from its rival realestate.co.nz after yesterday backing down on a 10-month push to hike fees under a new structure, an analyst says.
The Wellington-based company's shares have shed 24 percent since October last year, lagging a 9 percent gain in the benchmark NZX 50 Index over the same period, when the company tried to boost revenue by shifting all real estate agents onto a fixed fee-per-listing structure from a capped monthly subscription plan. Trade Me backed down on the plan yesterday following resistance from some agents, and will now offer either a lower fee per listing or a higher capped monthly plan.
"We think Trade Me's revised fee structure is a necessary back-down in the face of strong agent opposition and will result in a recovery in listing volumes," Stephen Ridgewell, an analyst at Craigs Investment Partners, said in a note. " Agents reverting to the monthly subscription fee - which we think will be most agents - will be incentivised to place all their listings on Trade Me. This should lead to a recovery in Trade Me's market share of listings."
Trade Me's share of listings has fallen to 84 percent of the total listings of industry-owned competitor realestate.co.nz from 87 percent in June, Ridgewell said.
Still, an improvement in the volume of listings will likely be offset by a fall in average yield, leaving the brokerage's overall forecasts for Trade Me's property revenue relatively unchanged, Ridgewell said.
In the year ended June 30, Ridgewell expects a 20 percent rise in Trade Me's property yield to be offset by a 6 percent reduction in volume, resulting in a 14 percent gain in property revenue to $26.5 million. Trade Me will report its 2014 earnings Aug. 20.
For 2015, Ridgewell is forecasting a 12 percent gain in yield to be offset by a 4 percent decline in volume with property revenue up 8 percent to $28.5 million.
Shares in Trade Me touched $3.36 in intraday trading today, their lowest level since April 2012. They recently traded at $3.44.