Andrew Macken of Montaka Global Investments presented his investment thesis on REA Group (Australia: REA) at Asian Investing Summit 2021.

Thesis summary:

REA Group is the leading Australasian property-listings platform. In its home market of Australia, it is by far the largest listings platform (in a highly-concentrated market) and adds significant value to property buyers and sellers.

Andrew believes REA is substantially under-monetizing today relative to the size of its addressable market. Furthermore, REA’s domestic addressable market will likely double over the coming years driven by higher housing turnover (supported by new regulation) and higher property prices (supported by central bank policies).

In addition to Australian property listings, REA has profitable growth options in other real estate services in Australia; as well as multiple market-leading positions in attractive property markets across Asia, including India and Indonesia.

Andrew believes REA is a stock that at first appears expensive at 39x EV/EBITDA, but is undervalued relative to its longer-term earnings power – which brings the effective EV/EBITDA multiple down to well below 10x.

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About the instructor:

Andrew Macken is the Co-Founder and CIO of Montaka Global Investments, a global equity manager based in Sydney and New York. Prior to establishing Montaka, Andrew worked as a senior member of Jim Chanos’ research team at Kynikos Associates, a global equity long/short fund based in New York. Andrew holds a Master of Business Administration (Dean’s List) from the Columbia Business School in New York. Andrew also graduated with High Distinction with a Master of Commerce; and First Class Honours with a Bachelor of Engineering from the University of New South Wales in Sydney.

For additional perspectives, please see a recent article by Andy.