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REA Holdings, at 1X…
Current, target price 62, 223 (+362%)

September 16th 2021
1 minute read

Sales up
  • Sales grew by 14% in the first half to 87.7 million dollars which is well above our forecast 77.5 million dollars.
  • Average semester growth is 19%.
  • We predict average growth of 10% in the next 12 months to bring sakes to 106.1 million dollars by the first half of 2022.

Costs improved
  • The cash cost ratio improved to -80% & profit turned positive 3.1 million dollars.
  • Average costs are at -86%.
  • We use the latest -80% costs to predict a 7 million dollars profit in the first half of 2022.
Data file & model
Cashflow higher
  • Cashflow was higher at 11 million dollars with lower investment spending of -4 million dollars in the first half.
  • Average cashflow is also at 11 million dollars.
  • We use the same -4 million dollars investment which with higher sales & margins gives a 16 million dollars cashflow in the first half of 2022.

Balance sheet, lower leverage
  • With investment gains, cash increased from 12 to 29 million dollars in the first half.
  • Liabilities declined again from 328 to 321 million dollars so net cash improved further from -316 to -293 million dollars.

Valuation at 1X…
  • REA capital from the last seven years worsened slightly to -111 million dollars in the first half.
  • At the current value of 37 million dollars, based on our forecasts, it’s at only 0.07X assets with a 9% yield.
  • Our cashflow forecast is 33 million dollars which is a 1X valuation. At 3X gives a 362% higher target price of 223 pence.
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