Net conquest
Analysts are cautiously optimistic that the company will make a profitable long-term investment.
Following in the footsteps of Travelplanet.pl and Bankier.pl, another e-commerce company is heading for the Warsaw Stock Exchange (WSE). But unlike its predecessors on the bourse, Netmedia is a multi-sector company offering online services in such fields as real estate, travel and financial brokerage. Also, instead of housing all its services on one website, it manages several, including hotele.pl, TravelPoland.com, rezerwacja.pl, locumnet.pl and Kredyty.net. The company wants to obtain zł.5 million from its IPO and sink the bulk of the funds in acquisitions.
"We would like to spend zł.300,000 to increase our turnover capital and zł.600,000 to upgrade our software, buy new hardware and generally improve the infrastructure, which is essential for our activities. The biggest amount, some zł.3.4 million, will cover our future acquisitions," said Andrzej Wierzba, Netmedia's CEO.
He added that the company is already in talks with a couple of entities from the real-estate and tourism sectors and that the first transaction may be finalized by the end of this year.
For those who worry that a company operating in many sectors cannot perform very well in any of them and will lose in competition with market leaders, Wierzba has got an instant answer:
"Opting for diversification was a deliberate strategy. We're trying to create a sort of multi-branch publishing house. It helps us to diversify the risks, it spreads our fixed costs to many segments. Our financial results, especially net profits, are similar to single-branch e-companies such as Bankier.pl or Money.pl," Wierzba says.
This "multi-branch publishing house" is currently based on three pillars. The first is IT services for the real-estate market. Netmedia is a provider of Multiple Listing System (MLS) software used to manage real-estate listings. Currently, the system is used by 1,800 real-estate agents, but the company wants to enlarge the network.
"In the US and Western Europe all the real-estate agents use MLS software - in Poland so far it's only ten percent. We believe it will grow very fast. We are already a market leader but we would like to provide MLS to as many real-estate agents as possible," Wierzba said.
Forming the second pillar of Netmedia's activity are hotels and ticket reservations, which can be made via such websites as hotele.pl, TravelPoland.com or rezerwacje.pl. In the future, Netmedia would also like to sell package holidays.
The third of Netmedia's business areas is financial brokerage - it offers loans via its Kredyty.net and MultiKredyt.com portals. MultiKredyt.com has also got two traditional offices in Warsaw.
"The demand for mortgage loans is growing very fast and we believe we can capitalize on this trend," Wierzba believes.
Netmedia's deputy president, Michał Pszczoła, says the company wants to further develop its e-commerce activities and that it already owns over 100 of the best domains related to the tourism sector, e-signatures and films.
Subscription for Netmedia's shares for small and large (minimum of 20,000 shares) investors will take place on October 11-13, with the share-price bracket set at zł.4-5. According to analysts, as a company in the early phase of development, Netmedia is an investment for those who like a bit of risk. However, analysts don't rule out the possibility of the offer's success.
"It's a small company floating only a million shares so of course there's a high risk related to price fluctuations as well as reductions. However, I believe it operates on a promising market - internet services are developing so, as a long-term investment it shouldn't bring losses," says Bartosz Stryjewski, an analyst at DM BO.
"The company's main strength is its software for real-estate agents. One of the biggest risks has to do with affiliated companies such as Polish Travel Quo Vadis, which is managed by the deputy president's mother. Cooperation between the companies generates 30 percent of Netmedia's revenues. So far, everything is going well but you never know," Stryjewski added.
In H1 2006 Netmedia posted zł.1.6 million in revenues and a zł.0.5 million net profit. Management estimates that in 2006 revenues will reach zł.2.7 million while net profit will swell to zł.800,000. The company began operating under the name Netmedia this year, after its previous incarnation, AWP Multimedia took over the assets of Net Travel, thus widening the scope of the company's activities to the tourism sector.
Netmedia's Wierzba is a four-time squash champion in Poland and time will tell if his company does equally well on the bourse.
Netmedia
CEO: Andrzej Wierzba
Strengths:
MLS software for the booming real-estate market
Growing popularity of e-commerce
Weaknesses:
Low recognition of internet domains
Small company in early phase of development
