Section 1: Company Overview and Fundamentals

1.1 Company Overview:

REA Group Limited (ASX: REA) is a leading global digital advertising business, specializing in property. REA Group runs Australia’s leading residential and commercial property websites namely, realestate.com.au and realcommercial.com.au. It also operates the dedicated share property website viz; Flatmates.com.au.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders: The top 10 shareholders have been highlighted in the chart below, which together forms ~66.39% of the total shareholding.

1.4 Key Metrics:

The Group has posted decent results in FY22 with healthy growth across Australia and India and sustained investment in strategic initiatives. Further, REA generated healthy operating cashflows, which enabled the company to further invest in innovation and strategic investments and provide dividends. Notably, the company has posted a decent improvement in debt to equity to reach 0.37x in FY22 from 0.46x in FY21. However, the company’s current ratio declined to 1.60x in FY22 from 1.95x in FY21.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

2.2 Insights of FY22:

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is December 21, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.