2 Media Stocks on the Rise – SWM and NEC

Stocks’ Details

Seven West Media Limited

Encouraging updates: Up 11.9% on May 03, 2018, Seven West Media Ltd (ASX: SWM) has been tracking momentum lately. The recent release of a presentation made at Macquarie Conference has revealed that SWM’s Seven has remained Australia’s leading FTA TV network for 11 consecutive years; and in content production and distribution, the group is Australia’s largest producer creating over 60% of Seven’s primetime schedule. The group’s TV segment has about 32.9% of total market share, representing the highest ever share any network has had nine weeks into the ratings season. Another key thing that has been encouraging is the secured dominant Winter and Summer sports with AFL to 2022 and Cricket to 2024. Its 7plus, which was fully launched in February 2018, has expanded to 3m unique online audience and is expected to do well in the growing digital market. This is expected to lift group’s earnings in the near term. SWM now expects FY18 EBIT to be at the mid-point of the guidance of EBIT between $220m-$240m. We give a “Buy” recommendation on the stock at the current price of $ 0.660.
 

7plus Growth Trends (Source: Company Reports)
 

Nine Entertainment Co. Holdings Limited

Strong Ratings: Nine Entertainment Co. Holdings Limited (ASX: NEC) has recently updated about a presentation made by Hugh Marks, Chief Financial Officer, at the Macquarie Australia Conference. According to the presentation, NEC is the only Australian media business with a unique set of video-based assets that combine the enduring strength of Free to Air TV with high growth businesses in each of Television, BVOD, SVOD and Digital Publishing. Further, the group has improved its rating during the period. For the six months ending on 31 December 17, Nine attracted a commercial network share of 39.5 per cent of the 25-54 -year demographics. For rating season of 2017, Nine Network won all the key buying demographics and recorded growth of around 2-3 points on 2016 season. For the half year, Nine’s metro FTA revenue share was at 13-year high that is at 40 per cent which brought the CY17 total to 38.3 per cent (up by 3 points on 2016). Further, the market continues to trade strongly. Nine’s Metro FTA revenues are trading around 5% ahead of same time last year, while core Digital advertising revenues are around 21% ahead for the same period. Looking ahead to FY19, the group will continue to grow the business momentum on the back of strong foundation established in FY17 and FY18.

 
Strong Ratings & Revenue Momentum (Source: Company Reports)

Recently, the group has lostits cricket broadcasting rights and confirmed that they have not been granted rights to Australian international cricket matches from the 2018/19 summer. Besides this, Pendal Group Limited (PDL), a substantial holder of Nine Entertainment Co. Holdings Limited, changed its substantial holding on April 27, 2018, from 9.91 per cent of the voting power to 8.81 per cent. Meanwhile, the share price was up by 92.09 per cent in the last one year (as at May 02, 2018) with a 3.3% rise on May 03, 2018, and the stock currently trades at its 52-week high levels. Hence, we give an “Expensive” recommendation at the current market price of $ 2.510, while media related challenges still prevail in the sector.

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