# REA - REA Group



## The Barbarian Investor (18 February 2005)

Just when i was thinking of getting on board the REA - real estate australia bus,it stopped and then backed up??

Is this just a correction or profit taking by share holders, any ideas on this share ?

It's another stock that i think has merit


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## The Barbarian Investor (22 February 2005)

*Re: REA*

Must've been profit taking?

I got in and it's on the rise again...glad to say..

PS have you seen CMQ's Chart of late .."ouch" for those that have big $'s (Super) in the stock.  I hope for thier sake it recovers


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## GreatPig (2 August 2005)

*Re: REA*

Looks like someone's excited about the abolition of vendor tax...

GP


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## Chief Wigam (22 October 2005)

*Re: REA*

Good pick. Hope you still hold. Revised takeover offer of $2.50 now in.


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## cdafam (21 September 2013)

*Re: REA - RealEstate.com.au*

My my, how times have changed.

Bought in last year at low-mid 30s. Will provide an analysis as to what's to come soon.


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## MrBurns (21 September 2013)

Years ago I was going to do a deal with them on something, they offered shares instead of money, I turned them down, they were 20c at the time 

- - - Updated - - -

I don't think they have a lot of upside with their model, the agents are sick of the charges and will start to leave before long, they should have diversified.


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## piggybank (4 February 2014)

*Re: REA - RealEstate.com.au*



cdafam said:


> Will provide an analysis as to what's to come soon.




Well *cdafam* that analysis report must be bigger than those research houses give out given 4 months have passed and not a word yet. Hopefully we won't have to wait too much longer

Only one of six stocks that finished in the postive today:1zhelp:.


​


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## piggybank (11 February 2014)

Hi,

The stock as gone up 8% since my last post (a week ago). Surely it won't be long before this stock joins the exclusive $50+ club!! Just looking at some of the fundamentals (thanks to my bank - which bank?).

The dividend yield is only 1% but then the share price has increased by 79% (capital growth) over the past year. The P/E is nearly 47% but the Debt/Equity ratio is zero compared to the market average of nearly 25%, so there is much to like about it. 

But then this isn't a tip, so if you are thinking of buying or even selling the stock, then please do your own research first 




​
Regards
PB


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## robusta (8 August 2014)

Down 8% today, I really want a piece of this business, then again I remember passing on it at 12.50 a few years ago...


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## crypto (9 August 2014)

robusta said:


> Down 8% today, I really want a piece of this business, then again I remember passing on it at 12.50 a few years ago...




Seems rather harsh, considering that their reports released on the 8th were still impressive, albeit, short of the expectations of some.


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## McCoy Pauley (11 August 2014)

crypto said:


> Seems rather harsh, considering that their reports released on the 8th were still impressive, albeit, short of the expectations of some.




It was trading at 40x earnings pre-release. It was priced for above perfection. Would appear to be a correction back towards a more sustainable share price.  I haven't read the results but the headlines seemed to be quite impressive, so I think it's an adjustment from the market towards reality.


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## crypto (2 September 2014)

McCoy Pauley said:


> It was trading at 40x earnings pre-release. It was priced for above perfection. Would appear to be a correction back towards a more sustainable share price.  I haven't read the results but the headlines seemed to be quite impressive, so I think it's an adjustment from the market towards reality.




Is a further "adjustment to reality" still to come? I hold no stock, BTW, other than that I have in the ASX game 

The graphs are talking to me, but as a newcomer, I am still to get my head around what they are saying


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## dlineinvestor (1 November 2014)

Online Property Advertising Group
Subsidary of NewsCorp

Judging by the chart seems institutions have been in a hurry to buy in the last 3 weeks. (Gaps) looks like it wants to test the Mar 2014 highs. Bullish flag pattern at current state.
If property prices are set to rise or fall ppl will use them, win win.

Any comments on current valuation or fundamentals are welcome.


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## Tano (1 November 2014)

The RE industry is sick of the BS prices REA charges and has formed an industry specific website to challenge REA.  Read up here:
http://www.propertyobserver.com.au/...quiiz-seriously-challenge-rea-and-domain.html

http://realestatetalk.com.au/the-new-website-for-buyers-sellers-industry/

_Its member base indications currently incorporate 60% plus of the major estate agency market
100% Industry Owned.  All major RE agencies around Aus are signed up.
100% Lower Cost.
_


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## dlineinvestor (1 November 2014)

Tano, very good reply I had no idea "Squiiz was out there, cheers. Will b int to see what happens to the REA share price short and long term


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## rimtas (6 November 2014)

REA is a good stock to trade at the moment. I do not make any coments on a larger degree, but from the top we had quite nice three wave setback and then an impulse wave rally followed. 
 After some sort of pulback (most likely to ~43 area), it should take wave B top at 48.90 and thus new highs will follows.  I am looking for a low risk entry sometimes next week or so.


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## Euler (19 November 2014)

MrBurns said:


> Years ago I was going to do a deal with them on something, they offered shares instead of money, I turned them down, they were 20c at the time
> 
> - - - Updated - - -
> 
> I don't think they have a lot of upside with their model, the agents are sick of the charges and will start to leave before long, they should have diversified.




... and I bought them at 14.5c ... however couldn't get enough of them.. were held very tight!


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## notting (16 July 2015)

REA What a day.




Analyse that! :nuts:

Now it's clear.  Having lost faith in the dictatorships casino, the Chinese are trading Ausi real estate and associated entities.


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## robusta (16 July 2015)

If that is true Notting it makes me very happy to hold some REA and IPP


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## notting (16 July 2015)

robusta said:


> If that is true Notting it makes me very happy to hold some REA and IPP




Not really true.

What I think what really happened was that the au$ dropped $1ish over night, due to an over reaction to Yellen Sept rate rise assurance and aus shares suddenly became undervalued especially relative to the Chinese GDP announcement yesterday that beat.  
The machines went bonkers at the open with internationals buying our market on the low dollar relative to China GDP beat. 
Quite a few spiked at the open as the algo's feasted on the gap.
What I think is good about it, in all probability, the ones that bounced hard at the open this morning will carry through over the next month or two as a short term trend.

Here are some that I noticed RIO, WSA, REA, OSH, WPL, OFX, MYR. There are probably alot more and some better examples.

IPP has been such a dog since Feb.  Comes out with killer reports then just goes the bone.  Not sure what's wrong with it.


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## robusta (12 August 2015)

Results out today
revenue up 20%
EBIT up 27%
EPS up 24%

looks like a good long term hold to me


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## Triathlete (4 June 2017)

Here is my latest weekly chart on REA analysis.

Chart looks good and have







only been trading it last few months between $62 and $65,I am looking for it to pull back into August although due to a dividend coming up in August the price may hold up till then before a pullback followed eventually by a continuation in price should the results be favourable time will tell though.

Any other views from both FA and TA or those that have been following this stock?


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## Tightwad (5 June 2017)

slightly concerned with macro issues at the moment, i may sell a few if it gets to the previous high.  not sure if there's any real consensus on what happens with the housing bubble, more listings sitting for longer may not be all there is to it.


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## Triathlete (6 November 2017)

Triathlete said:


> Here is my latest weekly chart on REA analysis.
> 
> Chart looks good and have
> 
> ...



Always good to see that previous analysis (chart above) come good with REA hitting $74.00 today up from $65.11 when first noted  2/6/2017 not sure from here though need to take another look wave 3 still looks good.


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## Triathlete (17 March 2018)

Time to take another look at REA to see how the analysis has turned out....Since 2/6/2017 when the chart was first posted we had a closing price of $65.11 and ran up strongly on what I would call a wave 3 hitting all the price levels noted on the charts above and then some hitting $81.10 for the wave 3 peak.....We have now had the 38.2% retracement which I make as the wave 4 at this moment in time and currently looking a the last wave 5 which I will be looking for a move towards $84.47 to $91.92 as of this moment should we follow Elliott wave......I also like to check and see what the yearly cycles are doing as well so I will post the chart below to help with our Technical analysis...as for the Fundamental analysis I rely on Lincoln stock doctor and their summary is below:

Strategic comment:
REA is a Star Growth Stock suitable for growth investors who want exposure to the number one property classified business in Australia with roots internationally. REA tends to trade at a premium to its industry given that it has a strong market position ahead of its main domestic competitor, Domain (GR4). For this financial year, management has indicated that the 2H18 result may be slightly behind 1H18 due to seasonal factors and increased marketing spend (GR3). 

In its latest result, REA reported a 7.6% rise in its annualised earnings before interest, tax (EBIT) with margins rising to 60.7% from 57.4%, despite a fall in the number of listings domestically over the 2Q. However, margins are expected to come under pressure as REA focuses on increasing investment in marketing, product innovation and investment in personnel. Despite this, REA retains strong pricing power as the number one player in the online property advertisement space.

Lincoln valuation....$70.95
Consensus............$78.50


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## greggles (19 March 2018)

Thanks for the analysis. REA has a great looking chart and is in blue sky territory now. They have ridden the Australian property boom all the way up. However, I can't help but wonder how much growth there is left given the recent easing of real estate prices in Sydney and Melbourne. Domain Holdings has performed poorly in comparison since its listing but I think the float was overpriced and badly timed.

REA will be an interesting one to watch to see if they can broaden their revenue base and keep the company growing.


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## JTLP (19 March 2018)

greggles said:


> Thanks for the analysis. REA has a great looking chart and is in blue sky territory now. They have ridden the Australian property boom all the way up. However, I can't help but wonder how much growth there is left given the recent easing of real estate prices in Sydney and Melbourne. Domain Holdings has performed poorly in comparison since its listing but I think the float was overpriced and badly timed.
> 
> REA will be an interesting one to watch to see if they can broaden their revenue base and keep the company growing.




But does it work on the volume of listings? Lots of people headed for the doors in Sydney (+20%)?


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## greggles (10 August 2018)

REA Group's FY18 financial results have improved considerably on FY17 in spite of the slowdown in the Australian residential property market.

Highlights:
•  Revenue of $ 807.7 million, up 20% 
•  EBITDA of $ 463.7 million, up 22% 
•  Net  Profit of $ 279.9 million, up 23% 
•  Full year dividend of $ 109.0 cents per share, up 20% 
•  EPS of  212.5 cents, up 23%

REA is currently trading at $83.87, up 1.90% on yesterday's close.


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## HelloU (21 August 2018)

dir did the big $1M cash-out............Hmmmm (kept $1K odd though so whatever that means)


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## rnr (26 May 2019)

On Monday of this week REA gaped up on open and made a new high of $94.37 with a further push up on Wednesday falling a couple of cents short of the high on Monday.
Daily volume has fallen since Wednesday which begs the question...will another assault on the ATH of $94.37 happen this week. A lack of support for a further run up may well result in an Island Reversal.


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## rnr (1 August 2020)

....and now another 14 months have passed by and the REA looks as though it may be setting up to challenge the ATH of $117.30.
For the last 29 bars the stock has been forming a rectangular pattern with a high of $112.65.
There is also an unfilled gap of $1.09 above the high which occurred at the start of the Covid-19 pandemic.


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## finicky (16 January 2022)

Defiantly I reckon REA is worth only a third of its current price, i.e about 7X book value to make 56 bucks. Interestingly (to me) it got down to almost this in the KungFlu CCP Wuhan virology lab caused crisis (hope I got all that in)

Prompted by an article on Livewire where 8 pundits pick their best buy in a crash. Three of them reckon REA.
8 of the best stocks to buy in a sell-off


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## Bourseboy (19 January 2022)

finicky said:


> Defiantly I reckon REA is worth only a third of its current price, i.e about 7X book value to make 56 bucks. Interestingly (to me) it got down to almost this in the KungFlu CCP Wuhan virology lab caused crisis (hope I got all that in)
> 
> Prompted by an article on Livewire where 8 pundits pick their best buy in a crash. Three of them reckon REA.
> 8 of the best stocks to buy in a sell-off



I hear what you are saying. It struck me as odd that 3 of the 'pundits' picked REA. Would love comments from others (based on fundamentals and based on TA).


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## jessicamel (17 November 2022)

REA released its Q1 FY23 results on the 9th November. Revenue and EBITDA grew 16% and 7% YoY respectively. Management continues to target full year positive operating jaws in FY23.  The results seem solid and everything looks fine.

But is it really the case?

Trajectory of the quarterly EBITDA and margin might shed some light.


Q1 FY22: $158m (+24% YoY) @ 59%
Q2 FY22: $210m (+28% YoY) @ 64%
Q3 FY22: $155m (+27% YoY) @ 55%
Q4 FY22: $150.5m (+0.5% YoY) @ 50%
Q1 FY23: $169m (+7% YoY) @ 55%
It is quite obvious that earnings growth is decelerating since Q4 FY22 and the margin also fails to maintain the 60% benchmark as in the past. So, what’s happening?

REA’s profitability comes from four line of businesses, namely


Australia – Property & Online Advertising
Australia – Financial Services
India
Equity-Accounted Associates (e.g. overseas investments)
Looking into each line of business:

*
Australia – Property & Online Advertising*

As we know, this is the bread and butter of REA. In H1 FY22, YoY EBITDA growth was 29% and corresponding margin was 71%. FY22 year end report no longer provides EBITDA breakdown of this business but was combined with Australia Financial Services. We can still find out the top line revenue grew 19% for the whole FY22.


Q1 FY23 result announcement mention growth in listing volume, product price and depth/Premiere penetration remain versus last quarter. Assuming cost structure didn’t change significantly, I reckon the Australia Property & Online Advertising still delivered over 20% YoY EBITDA growth in Q1 FY23.

*
Australia – Financial Services*

The Q1 FY23 report just states “Financial Services revenues declined in the quarter” without the exact figures. This is the Mortgage Choice business REA paid $244 million or $1.95 per share to acquire in 2021.  

Mortgage Choice's earnings per share dropped from 11 cents in FY19 to 7.5 cents in FY20 (-31% YoY).   Before the acquisition announcement, Mortgage Choice was traded at $1.195 per share.  Essentially, REA paid 26x PE ratio or a 75% premium of the market price to acquire Mortgage Choice as a declining business.

With high interest rate and mortgage becomes less affordable, Financial Services will continue to face strong headwinds and become a burden of the company.



*India*

The Q1 report says “REA India delivered strong revenue growth of 47% for thequarter…” but “Increased investment in REA India is expected to see EBITDA losses widen in FY23…”. Looking at the revenue growth trajectory:




H1 FY22:$24.5m
H2 FY22: $29.4m(20% Vs H1)

India’s economy was badly impacted by COVID till mid-2021. The Q1 FY22 (Jul-Sep 2021) results didn’t state the revenue of India business, it can’t determine whether the growth in Q1 FY23 (Jul-Sep 2022) is due to a low baseline in 2021. I’m looking forward to seeing the H1 FY23 revenue versus same time in FY22.

Though REA paid almost $100m in 2020 for the acquisition, India business will remain EBITDA negative and continue to drag the group’s profitability in the foreseeable future.



*Equity Accounted Associates*

There are three investment holdings in this line of business, namely Move, PropertyGuru and Other.


Move was acquired by REA and News Corp in 2014. It contributed to a total of $30m profit in FY21 & FY22.

REA invested $52m into PropertyGuru in 2021. PropertyGuru went IPO in NYSE in March 2022 for US$10 per share. Yesterday’s closing price was US$5.25 or equivalent to a 47.5% drop since IPO. REA had written off $6m in FY22 for this investment. If PropertyGuru’s share price continues to decline with the US market, more write off is possible.



In a nutshell, I think REA owns a highly profitable Property and Online Advertising business in Australia. However, the management made several acquisitions and investments between 2020-21 (Mortgage Choice, India Business & PropertyGuru) right before the world was moving from a loosening to a tightening monetary environment. The global tightening environment are strong headwinds for REA’s newly acquired businesses and will continue to drag the company’s profitability. This is not to mention the premiums already paid for making those acquisitions when the market was still hot. Those acquisitions turn out to be bad decisions as the management failed to anticipate a paradigm shift in the global economy.

The stock is currently trading at a 38x PE ratio (TTM). With a single digit to at most low double-digit earnings growth, PEG is much greater than 1 and the valuation is obviously too high. I won’t be surprised if the stock price continues to decline.


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