Tribe Property Technologies is a double, says Eight Capital

Eight Capital launched coverage on Canadian property management solutions company Tribe Property Technologies (Tribe Property Technologies Stock Quote, Charts, News, Analysts, Financials TSXV:TRBE) on Wednesday, with analyst Kiran Sritharan starting off with a “Buy” rating and $3.50 per share target. Sritharan said macro trends in property should act as tailwinds for the business going forward.

Founded in 2011 by current CEO Joseph Nakhla and first listed on the TSXV via a reverse takeover in March 2021, Tribe is a full-service property management platform to various stakeholders in the residential market. Tribe has management services, a community platform and marketplace and develop and landlord software tools, all aimed at helping residential communities and connect. 

The company reported $4.5 million in quarterly revenue for its Q3 2022, representing a nine per cent year-over-year increase, with operational moves over the quarter including the acquisition of a condominium management portfolio from a Vancouver-based management firm and a new strategic partnership with Hytec Water Management to support residential communities in their plumbing needs.

Sritharan’s investment thesis on Tribe focuses on secular housing themes that bode well for property management, including demand dynamics and tightening rental conditions, noting a current backlog of units under construction which when eventually added to the market will drive volume growth for Tribe.

The analyst also likes Tribe’s digital-first product offering, which differentiates itself by its monetized partnership model — Tribe’s platform acts as a digital marketplace for retail partners to offer products to Tribe’s communities.

“As a market leader nationally, we see Tribe benefitting from increasing supply of condos and rentals and macro trends that are beginning to serve as tailwinds for the sector. Our three-point BUY thesis and positive view are informed by: 1) favourable housing market trends; 2) Tribe’s product-market fit; and 3) the scaling recurring revenue model,” Sritharan wrote.

On its financials, the analyst is forecasting Tribe to deliver Q4 2022 revenue of $4.7 million, while for the 2023 year the analyst is calling for revenue of $21.4 million and moving to $26.5 million for 2024. On earnings, the forecast is for negative $6.7 million in adjusted EBITDA for 2023 and negative $4.6 million for 2024.

On a comps basis, Sritharan estimates Tribe to be currently trading at 1.1x 2024 EV/Revenue versus 1.0x for traditional property managers and 2.7x for Canadian property tech. At press time, Sritharan’s $3.50 target represented a projected one-year return of 100 per cent.

“We think that fundamental outperformance will drive share price appreciation and increased interest from investors,” Sritharan wrote.