This report is an updated version of the report published on 5 June 2025 at 1:36 PM AEST.

HomeCo Daily Needs REIT (ASX: HDN)

HomeCo Daily Needs REIT (ASX: HDN) is an Australian Real Estate Investment Trust, which invests in convenience-based assets throughout the target sub-sectors of Neighbourhood Retail, Large Format Retail, and Health & Services.

Recommendation Rationale – SELL at AUD 1.295

• Trading Near Resistance Levels: HDN’s share price surpassed its R1 level recommended on 31 Dec 2024. Therefore, HDN can face correction at the current levels.
• Financial Performance: Revenue for the first half of FY25 remained flat year-over-year at AUD 172.9 million. Borrowings rose to AUD 1,783.4 million as of 31 December 2024, up from AUD 1,384.1 million as of 30 June 2024.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/Sales, EV/EBITDA, P/E, and Price/Cash Flow) are higher than the average of Real Estate sector.
• Emerging Risks: HDN is exposed to property market volatility, as the value of its assets is influenced by external factors such as fluctuations in demand and supply for real estate, construction raw materials, sourcing costs, and broader economic conditions. These elements can lead to unpredictable changes in property valuations, which in turn affect the REIT’s net asset value and investor returns.

HDN Daily Chart

HDN Daily Technical Chart, Data Source: REFINITIV

Valuation Methodology: P/E Approach (FY June'26E) (Illustrative)

Stock might trade at a slight premium to its peers, considering the resilient portfolio valuations, positive net operating income growth in 1HFY25, cash rent collection, acquisition synergies, etc. For valuation purposes, peers include Region Re Ltd (ASX: RGN), Centuria Capital Group (ASX: CNI), and Charter Hall Retail REIT (ASX: CQR).

Considering that the stock has surpassed its R1 level, share price movement, current trading level, and risks associated, the share price can face consolidation at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 1.295 (as of 5 June 2025, at 12:48 PM AEST).

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 5 June 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.