REA Group (REA) SNAPSHOT
Profile: REA Group Limited (REA) is an online real estate advertising company. Its Australian websites include realestate.com.au, realcommercial.com.au and flatmates.com. REA also operates related services, such as mortgage broking group Smartline Home Loans, and provides property related data and analytics. REA owns various real estate portals in Asia as well as material stakes in US property group Move, Inc. and India’s PropTiger.
History: REA was established in a suburban Melbourne garage in 1995. It listed on the ASX in 1999. In 2007, REA acquired 59% of casa.it in Italy, and in the following year increased its stake to 70% and then 100% in 2011. In 2010, REA launched the first realestate.com.au iOS app. In 2014, REA entered North America with an investment in Move, Inc. In 2016, REA acquired flatmates.com.au. REA completed the acquisition of Hometrack Australia in June 2018 for $130m.
Earnings composition: In FY19, the Australia segment generated Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of $518m (99.4%). Financial Services reported $9.6m (1.8%), while the Asia segment reported $7.4m (1.4%) and Associates reported a loss of $14.1m (-2.7%). Corporate costs were $19.9m.
Most recent result – 1H20: EBITDA decreased 8% on the prior corresponding period (pcp) to $267m. Australia (Property & Online Advertising) EBITDA decreased 7% on the pcp to $272m. Australian residential listings declined 14% on the pcp, with declines of 17% in Sydney and 16% in Melbourne. REA noted that Q2 listings showed signs of a gradual recovering from Q1. New project commencements declined 30% for the period, impacting developer revenue. Buyer activity, as measured by email leads and phone reveals, increased 30% on the pcp. Financial Services EBITDA decreased 25% on the pcp to $4.3m. Asia EBITDA increased 11% on the pcp to $6.3m. Earnings per share (EPS) decreased 13% on the pcp to 116 cents. A $0.55 dividend was declared, in line with the pcp.
Company outlook: REA expects 2H20 “will deliver a stronger revenue outcome” and “more favourable listings conditions” based on indicators of a recovering Australian property market. Revenue growth is expected to be higher than cost growth for FY20.
Important dates: Ex-dividend date is 9 March 2020. Payment date is 24 March 2020.
Submit your email address below to download the full PDF Snapshot.