In today’s daily we have covered stock research on Seven West Media (BUY).









 
The S&P 500 was down by 21.45points or 1.03%on Wednesday to 2058.90 points. U.S. stocks fell on Wednesday as crude oil prices continued their descent, but the S&P closed out a third straight year of double-digit gains. For the year, the Dow ended up 7.5 percent, notching its sixth straight annual gain, and the Nasdaq rose 13.4 percent. The best-performing S&P component in 2014 was Southwest Airlines  up 124.6 percent, while Transocean Ltd , down 62.9 percent, was the worst.

Equities lost steam heading into the New Year after rallying nearly 6 percent over eight sessions, sparked by the U.S. Federal Reserve's commitment to be "patient" about raising interest rates and positive economic data.European shares advanced a third year, while Chinese equities had the best performance since 2009 even as emerging-market shares posted the first back-to-back annual loss in 12 years. 




Southwest Airlines Daily Chart (Source – Thomson Reuters)
S&P ASX 200 was down by 5.63points  or 0.10%on Wednesday and closed at 5411.00 points.  Reserve Bank of Australia showed private sector credit growing faster than forecast at 3 per cent in November and 5.9 per cent annually – its quickest pace in nearly six years. On Wednesday, CBA edged 0.1 per cent higher to $85.65, while Westpac slipped 0.1 per cent to $33.16. ANZ and NAB each rose 0.2 per cent to $32.09 and $33.60 respectively.
Woolworths added 0.4 per cent to $30.68, while Wesfarmers, owner of Coles Supermarkets, lost 0.7 per cent to $41.72. Resources giant BHP Billiton fell 0.4 per cent to $29.37, while main rival Rio Tinto gained 0.8 per cent to $58 as iron ore enjoyed its biggest daily price jump since mid-October. The Australian dollar was trading at US81.70¢ on Friday, compared with US81.93¢ at Wednesday’s local close. Through 2014, the Aussie ranged from as high as US95.05¢ to as low as US80.88¢. The following stocks will trade ex-dividend today: Clime Capital.
 

S&P ASX 200 Daily Chart (Source – Thomson Reuters)
 
Top Performers on the ASX 200 were :-


 
 
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Stock of the Day - Seven West Media (BUY)

We bring all eyes to Seven West Media (SWM) today which delivered its insights during the AGM in November 2014 and reported for a positive past year performance. The Company reiterated its business to be strong with market-leading presence across broadcast television, publishing and new forms of content delivery. SWM claims to have the structures and people to drive the development of its clients in changing times for media. There have been efforts made to allow cost management, drive greater efficiencies, and importantly bring media businesses together as “one company”.  The Company also aims to enhance the shareholder value in the coming twelve months. A strong balance sheet and focus on reducing debt become key supportive features for the Company. With finalization of new revolving credit facilities, SWM is committed to expanding its market-leading presence. The Company is also believed to be well-placed for building its businesses. Another focus has been on building the creative content while driving greater synergies across the media businesses.


Financial Performance (Source – Company Reports)

SWM stated that the performance of publishing businesses, particularly, the market-leading performance of The West Australian and leadership in key publishing categories with magazines business underscore the relevance of continuing investment. The Company believes in three important pillars to its growth strategy which entail maintaining leadership - not just in television but everywhere the Company chooses to compete; redefining the way to operate to better meet the needs of customers; and creating new revenue streams that establish new and better ways to serve clients’ needs.

With updates such as revolutionizing HBBTV which is expected in January in terms of covering the Australian Open, SWM aims to match the pace of the market. The new events business, Red Events, data programme from Red Fusion, and the integrated newsroom of The West Australian and TVW Seven Perth are all innovative and constitute a part of the development of the Company.


Total Costs (Source – Company Reports)

The Company is thinking about creating integrated business solutions. For instance, SWM is making efforts in bringing together its sales teams in alignment with one thing in common, i.e., customers’ goals as SWM’s goals. The Company has also outlined its path to 2020 and beyond, which entail various programming and content driven activities such as the Olympic Games for which SWM has secured all rights on all platforms.


Revenue Performance (Source – Company Reports)

SWM’s has illustrated great leadership skills in television business with Seven Network being number one for the eight consecutive ratings season. This brings record revenue shares. An additional season of the hit franchise, House Rules, a new series Restaurant Revolution, as well as two new Australian drama series, will add to the success. The Company is expanding its presence in television content creation with 7Wonder and 7Beyond focusing on the development and production for the UK and US markets. The efforts are also driving significant growth in streaming numbers on the PLUS7 catch-up service of the joint venture: Yahoo7. In newspapers, The West Australian is the best performing newspaper business in the country with Channel 7 Perth and other new forms of content delivery. Then, Better Homes and Gardens, marie claire, Who, In Style, Home Beautiful, New Idea, Women’s Health and Men’s Health are the leading magazine brands in their categories with well-integration into major television brands including My Kitchen Rules, House Rules and The X Factor.


Leadership in Newspapers (Source – Company Reports)

The Company advised that its group NPAT for the six months to 27 December 2014 may be as much as 10% lower than the prior corresponding period, nonetheless the full year underlying net profit is anticipated to be within the range of market estimates. These anticipations arose from the unexpected softness in the television advertising market in the first half of the year. SWM aims to remain at a 40 share, and to achieve almost 42% revenue market share in the first quarter, based on September SMI data.

However, the cyclical market weakness may lead to a flat TV ad market or even a slightly negative one in FY15. Advertising revenue trends in the publishing businesses have improved as expected when compared to last year. The changes are less significant in the West Australian Newspapers business than in Pacific Magazines.


Television Operations - News Slot Gaining Traction Vs Peers (Source – Company Reports)

However, SWM is contented with the full year outlook given at its FY14 results presentation. The Company is also revising its cost guidance and expects growth in group operating costs to be around 1% for FY15, down from the previous guidance which was around CPI levels. Accordingly, SWM believes to remain comfortable given that the fully year underlying net profit will be within the range of market estimates.

We like the story and reiterate a BUY recommendation for this stock at the current price of $1.35.


 
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