2 Stocks that rocketed High on ASX – SWM and FBU

 
Stocks’ Details
 

Seven West Media Limited

Inked an historic six-year agreement with Cricket Australia: Seven West Media Limited’s (ASX: SWM) stock climbed up 12.621 per cent on 13 April 2018 as the group inked a $1 billion deal with Cricket Australia for cricket broadcasting rights over the next six years. The group has been able to get the deal under the nose of Nine Entertainment, who lost the rights to SWM. This deal runs from 2018 through to 2024; and includes domestic free-to-air broadcast rights to Big Bash League matches (including all marquee matches and finals), all home international tests (including the 2021-22 home Ashes series), the key Women’s Big Bash League and International matches, and the most prestigious individual award in Australian cricket i.e., the Allan Border Medal and Belinda Clark Award. The annual cash right cost will incur $75 Mn per annum over the next six years. This deal will provide more than 400 hours of premium sport across the summer which is more than double that of the Australian Open, at a significantly less hourly cost. The management expects that this deal will lift the business at new level. The annual cash right cost for the six-year period is $75 million per annum. The deal will give about 400 hours of premium sport across the summer (more than the double of Australian open) at a significantly less hourly cost. It is a great deal for SWM’s advertisers and shareholders. Advertisers will be able to connect with mass media audiences as Big Bash and Tests attract the viewers throughout the summer. SWM is the premium producer of the sports content in Australia as it covered Winter Olympics, Australian Open, AFL and Commonwealth Games and is setting new standards for the cricket coverage in the next six years. For Australian Cricket, it means a lot and it will be provided with one of the Australia’s best Network and with the best sports partners.

On the other hand, the underlying profit after tax grew by 5.1% to $100.7 Mn in 1HFY18. The group delivered revenue of $811.3 Mn (including share of associates), which was down 10.4% as compared to previous corresponding period. EBIT stood at $159.3 Mn in first half of the year, up by 7.2% on year on year (YoY) basis. Moreover, the company has reaffirmed the full year 2018 guidance and expects Group EBIT in the range of $220 to $240 million. The company is confident on new 2018 scheduled content as they have already delivered strong start during the rating seasons. Further, 2018 will witness growth and strong FTA and online audiences, featuring the 2018 Winter Olympic, the Commonwealth Games in April and AFL. The recent launch of 7plus will also benefit the group. SWM has been advised by Cricket Australia about being the successful bidder with Foxtel, with regards to the speculation on cricket rights. The stock has fallen 10.77 per cent in last six months as on April 13, 2018. Based on business potentiality and other developments, we give a “BUY” recommendation on the stock at the current market price of $ 0.580.
 

Cost Reduction Target (Source: Company Reports)
 

Fletcher Building Limited

Fletcher reaffirms 2018 outlook: Fletcher Building Limited’s (ASX: FBU) stock surged up 8.468 per cent on 13 April 2018 based on the speculation that Wesfarmers has accumulated shares of Fletcher Building to have 3% to 4% of FBU’s total outstanding shares. However, the company has stated to have no knowledge of such an acquisition of stake by Wesfarmers. Besides this, the group has been awarded a two-months’ extension waiver from its U.S. Private Placement (USPP) and bank syndicate lenders. Under the term of new waiver, the syndicate lenders have now provided access to the Company’s full syndicate funding facilities.

On the other hand, the group generated total revenue for six months ended 31 December 2017 to $4,889 Mn which was up by 6% over prior corresponding period. However, the group delivered operating loss of $322 million, against the profit before significant items of $310 million for the first half of FY17. Further, the company has confirmed that there will be no change to its estimate of FY18 EBIT (before significant items) excluding Building + Interiors (B+I), of $680 million to $720 million, and no change to the estimated FY18 EBIT loss for the B+I business of $660 million.

Ellerston Capital Limited (Primary Person) and its associates became the substantial holder of the Company by securing 35,786,943 securities with 5.13 per cent of the voting power. Commonwealth Bank of Australia, a substantial holder of FBU has also changed its holding from 5.106 per cent to 6.021 per cent. The share price was down by 14.12 per cent in the past three months as on April 13, 2018. Based on the scenario looking at the Building + Interiors (B+I) business, we give an “Expensive” recommendation on the stock at the current market price of $ 6.020.


Operating Earning Overview (Source: Company Reports)

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