NINE ENTERTAINMENT CO. HOLDINGS LIMITED (ASX: NEC)

Market share dynamics coming into a favourable zone: Nine has been on some traction lately with market estimating the stock to be performing well at its half yearly results due in February 2018. The group’s refinancing of corporate debt facilities as provided by a syndicate of Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National Australia Bank, UBS AG, Australia Branch and Sumitomo Mitsui Banking Corporation, signifies group’s encouraging efforts. In the past one year, the group’s market share has been slightly better than peers like Seven West Media. Further, NEC’s revenue upside might be in place at the back of the ratings success for The Ashes cricket and addition of Married at First Sight on Honey Network that are expected to give some impetus in 2018 as well. Around 50% (by volume) of Nine’s television is going to be traded programmatically by June 2018, based on its automated sales platform, 9Galaxy. The programmatic offering across all platforms (linear television, online catch up, AVOD and live streaming and across every device) has thus been planned for FY18.

It is worth noting that year to June 2017 demonstrated only a marginal rise in group EBITDA of $206m, which was driven by efforts on underlying cost reduction of 1%. NPAT of $124m showed slight growth on FY2016. There was a $206m non-cash impairment of goodwill and an $86m cost associated with the negotiated exit of the Warner Brothers Life of Series obligations. With the improved scenario in 2018, the group is expected to perform well.

NEC stock has been up 18% in last six months (as at January 25, 2018) and we have a “Hold” position at the current price of $1.675
 

Efforts towards 2018 (Source: Company Reports)
 

IOOF HOLDINGS LIMITED (ASX: IFL)

Continued clients value service excellence: IOOF Holdings has been performing well in the past one year with about 19% surge in stock price, as at January 25, 2018. The group has been able to witness a positive start to its FY18 with net flows of $669 million in funds under management, administration and advice (FUMA) for the first quarter of the 2018 financial year (representing 19^th consecutive quarter of positive platform net inflow) while total FUMA as at 30 September 2017 amounted $115.2 billion and funds under supervision were $32.5 billion. The result falls in place with continued clients value service excellence. With a view that organic growth is crucial for IFL’s advice-led strategy, acquisitions are expected to add to the growth. In this regard, an upgrade position in wealth management cycle and acquisition of Australia and New Zealand Banking Group’s (ASX: ANZ) wealth business for $975 million, are expected to help the stock move up in terms of more momentum. The deal has been flagged to be the one that can enhance scale and create more value from cost synergies for IFL. While trading at a high level, we give a “Hold” on the stock at the current price of $10.85

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