REA Group Limited (ASX: REA) had a solid performance in the first half of financial year 2015 with high-double digit revenue and earnings growth. The operator of the number-one Australian property advertising website realestate.com.au has three lines of potential growth that can maintain its track record and expand the company's international presence.
- Premium property listing service
The property search website operator is experiencing strong growth in its depth advertising, where real estate agencies and property vendors pay extra fees for premium listing service. With listings increasing during a rising housing market, sellers want their properties to stand out and not get lost in the crowd of homes for sale. That means more premium income for REA Group.
- Expansion into US online real estate advertising market
In the second half, investors may also see more detail about how REA Group's recently acquired US property advertising company Move Inc is progressing. REA Group plans to use the company as a platform to take market share in the huge US property market. It is in direct competition with the number one online property advertising company Zillow.
Move Inc was acquired jointly with Rupert Murdoch's News Corp (NASDAQ: NWS) in a 20:80 split. Majority holder News Corp can utilise its extensive media and advertising power to attract listings and promote the service all across the US.
- Investment in iProperty will begin to grow
REA Group is a substantial shareholder in iProperty Group Ltd (ASX: IPP). Similar to realestate.com.au, iProperty Group is growing its online property advertising business network in South East Asia. Currently iProperty owns the number one property websites in four of its major markets – Thailand, Malaysia, Indonesia and the Hong Kong region.
REA Group sold its Hong Kong property website squarefoot.com.hk and print publication to iProperty in December for 5 million shares in iProperty. This put REA Group's holding at 19.9%. REA Group CFO Owen Wilson also joined iProperty's board to assist with the company's development. iProperty is forecast to be back in the black in financial year 2015 following a period of acquisitions and consolidation of its market-leading position.
REA Group is forecast to grow earnings on average 27% annually over the next several years. That makes it a fast grower investors can bank on.
