SCG share price in focus
Scentre Group is a real estate company specializing in shopping centres, operating under the Westfield brand in Australia and New Zealand.
The group manages a portfolio of 42 centres valued at over $34 billion, boasting an occupancy rate exceeding 99% and attracting more than half a billion visitors annually.
These centres are strategically located in prime trade areas and feature long-term tenancies with retailers catering to diverse consumer interests in fashion, dining, leisure, and entertainment.
REA shares
REA Group, best known for its realestate.com.au platform, is a Melbourne-based real estate advertising company majority-owned by News Corp.
Today, REA Group operates property websites in around 10 countries used by some 20,000 property agents. In a typical month, the core Australian website gets over 55 million visits. While the business has diversified globally, Australian operations still account for the bulk of revenue. Within Australia, REA makes money by listing properties for sale or rent and charging listing fees. They also have a financial services arm offering services like mortgage broking, but this is a much smaller part of the business.
REA’s competitive advantages, like any other established platform, are network effects and economies of scale. In other words, Domain (the #2 market player) is significantly smaller than REA in terms of users and views. This gives REA greater market power and pricing control. REA also benefits from owning assets across all parts of real estate, including listing, advertising, mortgage broking, and house sharing.
SCG & REA share price valuation
We would consider SCG to be a ‘mature’ or ‘blue-chip’ business, so some of the metrics that could be worth considering include the debt/equity ratio, average yield, and return on equity, or ROE. These measures give us a sense of the company’s debt levels, their ability to generate returns from their assets, and their ability to consistently return profits to shareholders.
For CY23, Scentre Group reported a debt/equity ratio of 87.3%, meaning the company has more equity than debt.
Over the last 5 years, SCG has delivered an average dividend yield of 4.8% per year. This is important to note if you’re looking for income from your investments.
Finally, in CY23, SCG reported an ROE of 1.0%. For a mature business you generally want to see an ROE of more than 10%, so SCG’s returns are a bit less than what we’d expect.
As more of a growth company, some of the trends we might consider for REA shares include revenue growth, profit growth, and return on equity (ROE). I say ‘trends’ because it’s always important to look at these figures over a few years. The trend is a much more valuable figure than a single measure at one point in time.
Over the last 3 years, REA has increased revenue at a rate of 18.6% per year to hit $1,677m in FY24. Meanwhile, net profit has fallen from $323m to $303m. As for ROE, REA’s last reported figure was 18.9%.
Please keep in mind that context is important. These metrics give us some indication of company performance, but it’s just the start of valuing SCG or REA shares. To learn more about valuation, check out one of our free online investing courses.
