The Motley Fool

The next BIG thing: iCar Asia Ltd and iProperty Group Ltd

Most investors are aware of the outstanding success the following three early movers into the online classifieds space have achieved – primarily at the expense of Fairfax Media Limited (ASX: FXJ) and News Corp (ASX: NWS).

The three companies I am referring to are of course Carsales.com Limited (ASX: CRZ), REA Group Limited (ASX: REA) and SEEK Limited (ASX: SEK). From standing starts these three online businesses have grown into companies with market capitalisations of $2.6 billion, $6.4 billion and $5.9 billion respectively.

 

Plenty of investors (myself included) are kicking themselves that they either did not foretell the level of profitability these three online businesses would achieve or refused to pay-up for the growth and quality.

 

So far it has been a “winner takes most” situation with Carsales.com, REA and SEEK all dominating their respective Australian markets where they had an early mover advantage. SEEK has also aggressively moved offshore to markets where it hopes to replicate its domestic employment classifieds success. By doing so, SEEK has avoided letting any Australian-based companies getting the jump on its international expansion ambitions.

 

The question investors need to ask themselves now is, will iCar Asia Ltd (ASX: ICQ) and iProperty Group Ltd (ASX: IPP) achieve in Asia what Carsales.com and REA Group have achieved at home?

 

iCar Asia currently has a market capitalisation of $120 million and operations in the populous nations of Malaysia, Indonesia and Thailand. While iProperty Group’s market capitalisation has exploded to nearly $600 million and the firm has operations in Malaysia, Hong Kong, Indonesia and Singapore with further investments in India and Philippines.

 

Foolish takeaway

Carsales.com, REA and SEEK were all small companies once upon a time. The massive market potential of an online classifieds business that achieves a “winner takes most” position in just one country, let alone in a number of countries is enormously valuable. While iCar and iProperty may look expensive on traditional metrics, they could very easily come to look very cheap in hindsight if they successfully execute their business plans.

NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!

Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading over 40% off its high, all while offering a fully franked dividend yield over 3%...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.