This report is an updated version of the report published on 27 February 2025 at 3:42 PM AEDT.

Qualitas Limited (ASX: QAL)

QAL is an Australian alternative real estate investment management firm specializing in private credit and equity investments. The company provides capital solutions across the real estate sector, including senior and mezzanine debt, preferred equity, and direct equity investments.

Recommendation Rationale - SELL at AUD 2.790

• Decline in Average Investment Size: In H1FY25, average gross investment size fell by 3% year-on-year to AUD 74mn. Meanwhile, corporate costs of the company increased by 22% year-on-year to AUD 5.05mn in H1FY25 vs AUD 4.16mn in H1FY24.
• Technical Observation: QAL shares are approaching its R1 as mentioned in the report dated 4 February 2025. Meanwhile, its 14-Day Relative Strength Index (RSI) is showing a reading of ~65.76, indicating that the stock is approaching overbought zone and may witness some retracement before moving higher.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/Sales, EV/EBITDA, Price/Earnings, and Price/Cash Flow) are higher than the median of the Investment Banking & Investment Services industry.
• Risks - Fluctuations in property market values can affect the valuation of Qualitas' investments and the performance of its funds.​ Also, any potential default by borrowers on loan repayments poses a risk to the company's lending activities.

QAL Daily Price Chart

QAL Daily Technical Chart, Data Source: REFINITIV

Valuation Methodology: Price/Earnings Approach (FY June'25E) (Illustrative)

QAL is expected to trade at a slight premium to its peers considering the FY25 EPS guidance, growth in H1FY25 EBITDA, NPAT and EBITDA margin expansion. For conducting valuation, the following peers have been considered: Goodman Group (ASX: GMG), Australian Ethical Investment Ltd (ASX: AEF), Regal Partners Ltd (ASX: RPL), and others.

Considering that the stock is approaching its R1 level, recent rally in share price, current trading level, and risks associated, the share price can witness resistance at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 2.790, as of 27 February 2025, at 2:45 PM AEDT.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 27 February 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.