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Fundamental Research Corp. initiates coverage of RESAAS Services with a Buy rating

The analysts say the Canadian firm has a 'disruptive suite of solutions' for the real estate industry in North America
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Analysts assigned a fair value estimate of C$1.05 per share on RESAAS Services

Analysts at Fundamental Research Corp initiated coverage of RESAAS Services Inc. (CVE:RSS) with a Buy rating and a fair value estimate of C$1.05 per share. The shares currently trade at C$0.54.

Vancouver-based RESAAS is a cloud-based and blockchain technology platform for the real estate industry. The firm’s platform allows thousands of real estate professionals across North America to network and get real-time information about new business opportunities.

Creating a 'Bloomberg Terminal'

The analysts wrote that the Canadian firm was creating the “Bloomberg Terminal” of real estate brokerage.

“RESAAS Services is a software as a service (SAAS) company that has developed a Business to Business (B2B) referral platform focused on real estate brokerage,” wrote Fundamental Research Corp. analysts Siddharth Rajeev and Anthony de Ruijter in a research note to clients issued Thursday.

The analysts pointed out that the real estate brokerage market is fragmented, with more than a million real estate agents in the US alone. They said RESAAS has entered the market with a “disruptive suite of solutions” designed to “facilitate communication, improve top-lines and bottom-lines within brokerages,” and ultimately increase deal flow.

Incorporated in 2009, RESAAS began revenue generation in January 2015, following three years of R&D and testing, and $30mln in development expenditures.

RESAAS has introduced BrokerOS, a communication platform designed to facilitate agent-to-agent collaboration within a brokerage. The platform functions similar to a social media network and was developed to increase referral activity and internal deal flow for brokerages. The firm’s second platform, RealTimeMLS, is a real-time property listing sharing solution that allows members of a network to share both off-market and on-market listings.

“Pre-market (non-public) real-estate listings, especially in active real-estate markets, typically lead to pricing inefficiency. To solve these issues, RESAAS has introduced their BrokerOS and RealTimeMLS platforms,” wrote the analysts.  

The company utilizes a freemium model for non-enterprise users, with individuals paying a fee of US$30 per month for premium content. Premium content includes real-time notifications for referrals in the agent’s area, and analytics to provide leads to the agent.

Harnessing blockchain technology

The analysts said RESAAS Services has acquired a company with a real estate focused blockchain technology, potentially allowing the company to generate transaction fees from processing “smart contracts.”

“Moving forward, the company believes processing fees on referrals made through their platform could be an additional income stream. With regards to this, the company has acquired Real-Block Inc., a company that has developed a blockchain enabled “smart contract” functionality for the real estate market,” wrote the analysts.

Fundamental Research has provided equity research coverage on over 280 small and micro-cap public companies.

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