REA Group Ltd 

REA Witnessing Higher Engagement Levels: Earlier, REA Group Limited (ASX: REA) had reported Q1 FY 2019 results and the company had stated that the robust response had been encountered from the consumers with respect to all the platforms. The company’s revenues in the stated time period amounted to $221.9 million which reflects the rise of 17% on the YoY basis. These revenues are after the broker commissions. The company had also stated that the results were posted amidst the market environment which was unfavourable. The growth in the revenues was witnessed on the back of product mix improvement, changes in the prices which were effected from July 1 as well as further penetration.

Key Financial Metrics (Source: Company Reports)

Recent Appointment of REA’s CEO: In December 2018, REA Group had made an announcement related to the appointment of the chief executive officer (or CEO). As per the release, Mr. Owen Wilson had been considered for the designation of CEO. He started working with the company in 2014 and was the CFO (or Chief Financial Officer). Mr. Owen Wilson was handling the company’s finance portfolio. The chairman of the company’s board named Mr. Hamish McLennan reflected positive views about the appointment and stated that Mr. Wilson is possessing the group’s understanding and the customers’ importance as well as the group’s long-term strategy.

Key Growth Pillars of REA Group: As per the annual report of FY 2018, REA Group had stated three pillars which reflects the company’s growth strategy. The property advertising, lifestyle and financial services as well as global happen to be the three pillars.

As depicted by the press release dated August 10, 2018, in FY 2019, the company had stated that the commencements of the new projects might be lower, especially in east coast capital cities.

Stock Recommendation: On the daily chart of REA Group Limited, Moving Average Convergence Divergence or MACD has been applied and default values have been achieved. As per the observation, the MACD line has crossed the signal line and is moving upwards. This represents that the stock might witness bullish momentum moving forward. On the stock performance front, the share price has fallen 7.57% in the past three months and is trading at P/E multiple of 38.43x which is higher than the industry average of 7.0x, representing overvalued at the current juncture. By looking at decent outlook and aforesaid facts, we maintain our “Hold” recommendation on the stock at the current market price of $75.140 (up 1.885% on January 09, 2019).
 

Commonwealth Bank of Australia

Decent Performance in Q1 FY 2019: Earlier, Commonwealth Bank of Australia (ASX: CBA) had reported the decent results for Q1 FY 2019 in the financial institution had managed to show decent performance. The release had also stated that bank had possessed the robust backing in terms of the fundamentals. In the September 2018 quarter, the bank had witnessed decent credit quality, strong balance sheet as well as the growth in the deposits.

Liquidity Coverage Ratio (Source: Company Reports)

Commonwealth Bank of Australia had witnessed a rise in the liquidity coverage ratio or LCR in the September 2018 quarter on the YoY basis. At the end of September 2018 quarter, the bank’s liquidity coverage ratio stood at 133% while at the end of September 2017 quarter it was 131%. Asdemonstrated by the bank’s FY 2018 results presentation, the bank’s revenues are helped by the modest rise in the volumes as well as asset repricing. The bank happens to be in the decent position with regards to the net interest margins (or NIMs). At the end of FY 2018, the bank’s NIM was 2.15% which is higher than the industry median of 1.94%.  

Focus Towards Better and Simpler Bank: In the release related to the Q1 FY 2019 trading update, Commonwealth Bank of Australia had stated that they are in the process of becoming a better as well as simpler bank which would be in accordance with the customers’ needs which are present in the core markets.

The bank would be working towards improving the 4 critical capabilities. These capabilities are an operational risk as well as compliance, reduction in the costs, data as well as analytics and innovation.

Stock Recommendation: On the daily chart of Commonwealth Bank of Australia, Moving Average Convergence Divergence or MACD has been applied and default values were considered. After careful observation, it was observed that the MACD line has crossed the signal line and is moving upwards which is a positive sign for the stock. This suggests that the stock might witness bullish momentum moving forward. After falling from the high of $82.66 to the low of $65.230 during the course of 2018, the stock has recovered almost half and is looking attractive at the current levels. Hence, we maintain our “Buy” rating on the stock at the current market price of A$72.330.
 

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