REA Group Ltd

Strategic investments and Leadership in Asia: REA Group Limited (ASX: REA) has been making strategic investments in the United States as well as in India. The company managed to strengthen its position in the Asia region in FY 2018. The company has come up with new apps as well as websites which could help in building the brand image moving forward. The company’s investments in Move, Inc. has positively impacted the company’s performance. As a result of this, the company has improved its search engine which has helped it in gaining the customer attraction. The company launched Realsuite which could help the agents.

REA’s FY 2018 numbers (Source:  Company Presentation)
 
The investments by REA in India have also started to pay off. The investments like PropTiger, Housing.com as well as in makaan.com have favorably impacted the company’s performance. On these platforms, the company witnessed robust traffic in FY 2018.
 
Innovations and Outlook: In June 2018, REA Group made an acquisition of Hometrack Australia. The company expects that with this acquisition, the company can advance more insights as well as property data to the consumers. In FY 2019, Hometrack is expected to generate revenues in the range of $14 million-$16 million while EBITDA is expected in the range of $6 million-$7 million. In terms of innovations, the company has come up with the new products for the customers and it is working to improve the customers’ experience.
 
Technical Overview: Relative Strength Index or RSI has been applied on the daily chart of REA Group Limited by considering the default values. As per the observation, the 14-day RSI has breached the oversold region and is expected to bounce. Hence, we maintain “Hold” rating on the stock at the current price of $ 71.790.
 

Carsales.Com Limited

A look at FY 2018 Results: Carsales.com Limited (ASX: CAR) ended FY 2018 by generating revenues amounting to $444 million. The company has been making significant investments for future growth. Domestically, the company witnessed robust momentum with respect to the research and services as well as online advertising and data divisions. It is substantially benefitting from the adjacent market strategy.

EBITDA Margin Performance (Source: Company Presentation)
 
On the international basis, in FY 2018, the company’s performance was helped by acquiring the pending stakes with respect to the Mexican as well as South Korean businesses. As per the company’s management, a favorable momentum was visible in Argentina as well as Mexico. From FY14-FY18, the company has managed to record a CAGR growth of 17.2% in the revenues while CAGR growth with respect to EBITDA was 10.3% within the same time-frame.
 
Performance Moving Forward: The management of CAR has an optimistic outlook for the company. As per the management of the company, EBITDA, revenues as well as NPAT are expected to witness robust growth moving forward in the domestic markets. Domestically, if the market conditions remain favorable, the company could witness positive momentum in the Finance and Related Services business. On the International basis, the company is expected to experience robust momentum in the earnings as well as revenues in FY 2019 in the South Korea for SK Encar. Internationally, if the markets remain favorable in Brazil, the momentum is expected to be witnessed in the earnings as well as revenues in FY2019 (in terms of local currency) for Webmotors.
 
Technical Standpoint: MACD indicator has been applied on the monthly chart of Carsales.com and default values have been considered. As per the observation, the MACD line has just crossed the signal line and is moving downwards. Since, the crossover has just occurred, we can say that the stock looks “Expensive” at the current level of $ 13.440.  
 

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