The average target price of RPL.AX is 4.3 and suggests 98% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 5.9. This translates into 174% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 3.3. This suggests 53% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Regal Partners Limited is a privately owned hedge fund sponsor. The firm invests in the public equity and hedging markets across the globe with a focus on Australia. It employs market neutral and absolute return strategies to make its investments. The firm also employs fundamental analysis along with bottom up stock picking approach to create its portfolios. Regal Partners Limited was founded in 2004 and is based in Sydney, Australia.

Australia

Regal Partners Limited

Financial Services

The company pays dividends most of the time. It has paid dividends in almost every one of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been outstanding and can be rated excellent compared to its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. On average, the company pays dividends twice a year. 

RPL.AX reported revenue of AUD 255mn in the last 12 months, up 144% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 0% from FY23 to AUD 0.22. Market expects EPS to reach AUD 0.27 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 39ppts and its growth accelerated by 6ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is slightly unfavourable.

The company has reported strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 44.5% in the last 12 months, a decline from 47.3% in FY23. 

Historically, RPL.AX has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 26.0%, down from 26.2% in FY23. 

Regal Partners Limited reported a return on equity (RoE) of 9.3% in the last 12 months, down from 11.5% in FY23. The market consensus projects an RoE of 27.4% in FY24, this time above its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to 8.1%, below the peers. The consensus estimate for FY24 for RoCE is 36.9%, however, this time ahead of the peers. 

Another important profitability metric, return on assets (RoA), amounted to 8.1% in the last 12 months, a decrease from 9.6% in FY23. The market analysts predict that RoA will be 22.9% in FY24, again stronger than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.0 in the past several years. This ratio implies a average shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

RPL.AX has below average trading liquidity. The average private investor can sell his common position in the stock in a single trading day. Liquidity is relatively stable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is minimal. We note resilient historical revenue growth, robust profitability, strong debt servicing capacity, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to weak positions in its industry, excessive margin volatility.

In highly turbulent market conditions, RPL.AX is as volatile as an index. In other words, the stock will move with the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be limited. 

In normal market circumstances, RPL.AX is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from limited to average. 

Based on key historical and expected multiples, the stock is slightly undervalued relative to its peers. Specifically, the stock is fairly valued on P/E, undervalued on EV/EBITDA, underpriced on P/FCF. 

Regal Partners Limited

A$ 2.12

5

Regal Partners Limited

A$ 2.12

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

A$ 2.12

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