April 17, 2007

Deutsche Bank initiates coverage of Radio Rentals

Deutsche Bank has initiated coverage of household goods rental provider, Radio Rentals (ASX: RRA), with a Buy recommendation.

Research analyst, Neil Watson initiated coverage with an A$0.90 twelve month price target.

Mr Watson said “Radio Rentals ‘rent-try-buy’ proposition has enhanced returns while at the same time providing a platform for expansions into new products.

“Ultimately, this is a counter-cyclical play – should unemployment and interest rates rise, Radio Rentals will benefit from an increase in its addressable markets.

“We forecast a 19 percent EBIT four year compound annual growth rate, underpinned in the near term by the robust ‘rent-try-buy’ model and the early stage roll-out of new products” he noted.

Radio Rentals is Australia’s leading provider of rental assets to the credit or cash constrained (sub-prime) market, with a ‘rent-try-buy’ model. Its customer base can be classified into three main categories:
Cash constrained (~48%): consumers without the financial means to acquire an asset outright or access to credit to buy it;
Credit constrained (~38%): consumers with regular, reasonable income but who are fully leveraged; and
Situational (~14%): for example, students or those living in transitional or shared accommodation.

The company has approximately 200,000 items on rent, and employs over 400 people across 67 stores around Australia.

For further information, please call:

Cathy Knezevic
+61 2 8258 2792


Kate Abrahams
+61 2 8258 2416

About Deutsche Bank

Deutsche Bank is a leading global investment bank with a strong and profitable private clients franchise. A leader in Germany and Europe, the bank is continuously growing in North America, Asia and key emerging markets. With EUR 1,126 billion in assets and 68,849 employees in 73 countries, Deutsche Bank offers unparalleled financial services throughout the world. The bank competes to be the leading global provider of financial solutions for demanding clients creating exceptional value for its shareholders and people.