How long have you held the REA (REA) Group?

We have held it since the 14th of February 2013. REA is a digital advertising business focused on real estate – the operator of 13 websites such as realestate.com.au

What do you like about it?

We feel that the value creation in the migration from print to digital business models still has a long way to go. REA Group is less mature than their Australian-listed peers, which have a more mature domestic market. REA should continue to create shareholder value, owing to their move from subscription pricing to depth-based listing products (products which offer an extra layer of tailored service to users).

How is it better than its competitors?

REA’s main competitor, Domain.com.au, is less well funded and management hasn’t delivered the market share gains that REA has. REA continues to dominate the market in terms of average monthly unique visitors, and average number of minutes spent on the site.

What do you like about its management?

The CEO has done such a good job. He was head-hunted by a large international player from Germany. The next CEO is likely to continue the current strategies.

What is your target price on REA Group?

$50.

Source: Yahoo

At what point would you sell it?

When we feel it is fully valued relative to the market.

How much has it added (subtracted) to your overall portfolio over the last 12 months?

It has been a substantial positive contributor to performance.

Is it a liquid stock?

Yes, it is a liquid stock now, despite the free float being small.

Where do you see the value?

We believe sell-side analysts have underestimated the value creation that could come from the migration of all clients to depth products. We believe the stock will continue to deliver positive earnings surprises.

Jelena joined Platypus as an analyst in October 2008 from Deloitte where she worked in Corporate Finance as a Valuations Senior Analyst; Jelena had been with Deloitte since 2005.

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