Pexa (ASX: PXA)
Share Price and News
About Pexa
Pexa (Property Exchange Australia) is an Australian company that facilitates digital property transactions, offering a platform to streamline property settlements.
Launched in 2010, after the Council of Australian Governments (COAG) agreed to digitise and automate conveyancing, the company's creation revolutionised property dealings by replacing outdated paper-based processes with secure, efficient digital solutions.
Pexa's platform is used by property lawyers, conveyancers, and financial institutions to electronically lodge documents with the Land Registry and settle property transactions in real time.
With a strong presence in Australia, Pexa is expanding its services internationally, targeting the UK market initially.
Pexa's Company History
Founded in 2010 amidst a push to digitise conveyancing, Pexa emerged as an innovative solution to improve the efficiency and transparency of property settlements in Australia. Initially backed by major banks and institutional investors, Pexa launched its e-conveyancing platform to replace outdated paper-based property transactions.
Over the years, Pexa has expanded its reach. As late as 2017, only 20% of all refinancing transactions were done on Pexa, but now this is figure is 99%. Its share of property transfers could be higher but is an impressive 80%.
The company did its IPO in 2021, making it a publicly listed entity on the Australian Stock Exchange (ASX: PXA), having raised $1.2bn at $17.13 per share. Since then it has expansed its capabilities through M&A.
In August 2022, it bought informed decisions, which provides economic tools and consulting services for decision making. In May 2023, it launched Value Australia which is an AI-powered property valuation tool. And it bought Land Insight, a leading environmental risk data analytics technology. For its UK ambitions, it bought Smoove, Smoovе is essentially the UK equivalent of Pexa, a company that usеs cloud-based solutions to makе thе conveyancing process more efficient.
Future Outlook of Pexa (ASX: PXA)
Pexa's future outlook is influenced by its ability to retain its Australian monopoly and to expand into the UK and perhaps other markets.
There has long been talk of opening the market to competition – obviously this would be bad for Pexa. There is only one formal ‘Electronic Lodgement Network Operator’, Sympli, but it is a minnow compared to Pexa.
The ACCC is investigating complaints of anti-competitive behaviour – specifically during period the company has been supposed to be making its systems interoperable with competitors. The intended deadline for this to happen is December 2025, but this may not be reached.
As for its UK expansion, this has been slower and will continue to be. Keep in mind that the Australian roll-out was easy because it was enforced by the government - this won't be so in the Old Dart. There may also be resistance amongst conveyancers who earn deposit interest right now and would lose it. Absent orders to use Pexa, there is little incentive to use it. It may be another couple of years before we see meaningful figures from the UK.
Is Pexa (ASX: PXA) a Good Stock to Buy?
Pexa's stock presents an intriguing investment case for those seeking exposure to the fintech and real estate sectors. The company's valuation is competitive compared to other ASX-listed technology firms. However, it currently does not pay a dividend, which may be a consideration for income-focused investors.
The increasing shift towards digital property settlements provides a strong growth trajectory for Pexa, especially as the property market in Australia and the UK continues to embrace technology. On the risk side, volatility in real estate market cycles, regulatory changes, and potential technological disruptions could impact Pexa's growth. Of course, the biggest risk of all is the risk of the market opening up to competition.
Despite these risks, Pexa's leadership in the sector and its robust financial health make it an appealing option for investors looking to tap into the growing trend of digital transformation in property transactions.
Our Stock Analysis
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Frequently Asked Questions
As of now, Pexa does not pay dividends and so there is no dividend yield.