REA Group's financial report for 1H is impressive in wake of real estate downturn

Proptech specialist REA Group is continuing to attack the Australian real estate industry head-on through the worst dip in sales the country's seen in decades with the report of a promising first-half financial result.

However, REA’s profit boost was tempered by a $173.2 million impairment in its Asian division.

REA Group reported revenue and earnings from core operations rose 15 and 19 per cent respectively, and the company raised its interim dividend to a fully franked 55 cents from 47 cents a year ago.

Australian revenue rose 15 per cent to $443.2 million, which REA said was driven by an increase in revenue from the residential business and the inclusion of recently acquired property data and automated valuations business Hometrack.

But the overall bottom line was hit by a fall in value in REA Group's Asian unit.

First-half profit fell 98 per cent to $2.468 million in the six months to December 31 due to the $173.2 million impairment against a unit that includes operations in Malaysia, Hong Kong, Indonesia, Thailand and Singapore.

REA Group said changes in the macro economic environment, including additional government cooling measures, have resulted in more challenging conditions in some markets.

Morningstar equity analyst Gareth James said overall first-half earnings exceeded analyst expectations. He has increased his fair value estimate by 5 per cent to $62.00 per share, reflecting higher earnings forecasts and the time value of money impact on Morningstar's financial model.me.

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