Is REA Group Limited Set To Come Out With Flying Colours Through The FY19 Half-Yearly Results?

Is REA Group Limited Set To Come Out With Flying Colours Through The FY19 Half-Yearly Results?

REA Group Limited (ASX: REA) is a multinational digital advertising company that specializes in real estate. It operates Australia’s leading commercial, residential, and share property websites and owns portals in Malaysia, Hong Kong, China, Singapore, Thailand, and Indonesia. It provides up to date renovation tips, property news, lifestyle content, and property estimates.

On 25 January 2019, the company announced that it would be declaring its results for the first half of FY19 ending 31 December 2018 on 8 February 2019 at 10:00 am AEDT. This will be followed by a briefing event hosted by the CEO, Mr. Owen Wilson.

As per its FY18 annual report published on 19 October 2018, the company provided its earnings guidance for FY19. In June 2018, REA acquired Hometrack Australia, a provider of property data services to the financial sector, which is expected to deliver revenue of A$14 million to A$16 million and EBITDA of A$6 million to A$7 million in FY19. Meanwhile, during 1Q19, REA delivered revenue of A$221.9 million with an increase of 17% over the previous corresponding period (PCP). The growth was on account of Australian Residential business and the inclusion of Hometrack Australia business in this quarter. It reported an EBITDA (including a share of losses of associates) of A$130.9 million in 1Q19 as compared to A$106.6 million in 1Q18 with a rise of 23%. The free cash flow was also reported with a surge of 52% in 1Q19 over 1Q18.

As per the management, REA was able to report strong results despite the tough conditions in the market. Its website platform, realestate.com.au saw a huge traffic with 2.7 times more visits than its nearest competitor over the first quarter of FY19. During the same quarter, its app was downloaded more than 8.3 million times and was launched on average 27.2 million times a month.

On 15 November 2018, REA announced Ms. Tracey Fellows to step down from the position of Chief Executive Officer (CEO) in January 2019 and remain the Director on the Board. She would be joining News Corp as the President of one of the segments of the group, Global Digital Real Estate. News Corp is domiciled in New York. Mr. Owen Wilson will take charge of Ms. Tracey Fellows and will be the new CEO of the company.

Looking at REA Group Limited’s stock performance and the return it has posted over the last few months, the stock has generated a negative return of 15.49% during the past six months and a positive return of 4.2% and 1.5% during the past three months and one month, respectively. It is currently trading at $75.72 (at the close of the market on 31 January 2019) with a rise of 0.83% in the price during the day’s performance. REA has a market cap of circa $9.89 billion and the 52-week high and low for REA are marked at $94.120 and $69.230, respectively. REA has a P/E ratio of 39.13x with an annual dividend yield of 1.45%.

Overall, the group is able to maintain resilience over the last few years despite difficult market conditions. The developments at hand and other key aspects and long-term opportunities from offshore businesses are expected to help REA maintain the performance track going forward.


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