In today’s daily we have covered stock research onSouthern Cross Media (Hold).

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The S&P 500 was up 9.53 points or0.48% on Monday.  U.S. stocks ended higher on Monday, with the Dow Jones industrial average hitting an intraday record, lifted by Citigroup's better-than-expected earnings and more deals in the healthcare space. Shares of electric car makers also surged on Monday after China-based electric vehicle maker Kandi Technologies Group Inc's sales from its joint venture in China more than tripled in the second quarter from the first quarter.

Citigroup climbed 3 percent, leading financial shares higher as trading revenue topped estimates. Facebook Inc. and Netflix Inc. paced gains in Internet stocks. The mood was similarly buoyant across the Atlantic where the FTSE Eurofirst 300 index rallied 0.8% after last week’s 3% slide and the XETRA DAX in Frankfurt climbed 1.2%. Gold was down $31 or 2.3% at $1,306 an ounce its biggest single session percentage drop since early December.


Citigroup Daily Chart (Source – Thomson Reuters)
 
S&P ASX 200was up by 24.6points or 0.45%on Monday and closed at 5511.4 points. Astro Japan Property Group expects the underlying after tax profit for the year ended June 30 2014 to be in the range of $26.8 - $27.2m. Standard & Poor’s Rating Services affirmed its credit rating of Leighton Holding as BBB-/A-3 with stable outlook and removed Leighton from negative credit watch. The top two performers on ASX 200 were NRW Holdings and Kathmandu.

IINET has appointed David Buckingham as the new Chief Executive officer. Woodside Petroleum has finalized an agreement to farm in to the prospective basin of Lake Tanganyika in Western Tanzania. David Jones shareholders have backed the $2.2 billion takeover from South African retailer Woolworths. Investec’s Australia Property Fund is buying Office Park Developments  in Fortitude valley for $68.5 million. Iron ore was up 1.03 per cent at $US97.90 a tonne.


Kathmandu Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 




Stock of the Day – Southern Cross Media (SXL)

SXL downgraded its FY14 outlook given ratings/revenue share pressure at its Metro Radio/Regional TV businesses. SXL guided to a 10% decline in underlying NPAT versus the previous corresponding period. Main drivers of the downgrade were: 1) Ratings decline in Regional TV & Metro Radio. 2) Softer advertising market conditions. 3) Higher costs with increased advertising/promotion costs in metro radio and the higher regional TV affiliate fee.


SXL Reach  (Source – Company Reports)

The loss of Kyle/Jackie O on the Today Network and the weaker ratings of a number of the new breakfast shows has put pressure on the 2H14 Metro radio revenue. While SXL has strong track record on cost control, in FY14 management are reinvesting recent cost savings back into content and Advertising/Promotion costs given the recent programming changes.  


SXL Brands (Source – Company Reports)

TV ratings for Channel 10 product have failed to recover since the improved start to CY14, assisted by the Big Bash/Winter Olympics. In the 2014 ratings YTD, SXL’s ratings declined -0.4% (18.2%). The challenging ratings performance of SXL’s regional TV network has coincided with soft ad market conditions in SXL’s main advertising markets.
  

SXL  Daily Chart (Source – Thomson Reuters)

While historically SXL has demonstrated strong cost control, management indicated that they would be reinvesting recent radio cost savings back into content and Advertising/Promotion costs given recent programming changes. In 1h14, SXL increased Metro Radio expenses by +6%, management indicated a similar level of expenditure in the 2H. SXL’s gearing remains towards the higher end of the Australian Media sector universe. We put a HOLD recommendation on the stock at the current price of $1.145.
  

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