oOh!media Limited

OML Details

Decent Outlook: oOh!media Limited (ASX: OML) is an Out of Home media company, which offers advertisers the ability to create deep engagement between people and brands across one of the largest and most diverse Out Of Home location-based portfolio in Australia and New Zealand. The market capitalisation of the company stood at ~A$729.93Mn as on 26^th Aug 2019. Recently, the company has published an investor presentation, wherein it highlighted its operational and financial performance for 1H FY19. Looking across its portfolio, Fly reported revenue amounting to A$32.9 Mn in 1H FY19 as compared to A$29.3 Mn, which reflects a rise of 12% on pcp basis while the revenue of Locate rose 10% YoY and these increases were driven by management actions taken in the past two years which continue to deliver benefits in 1H FY19.

The company reported a revenue amounting to $304.9 Mn in 1H FY19 in comparison to $291.0 Mn with a growth of 5% on pcp. The net profit after tax of the company stood at $9.0 Mn in 1H FY19 against $12.0 Mn of 1H FY18, reflecting a decline of 24% due to the softer EBIT which amounted to $24.3 Mn, down 17% on pcp.  The company declared an interim dividend of 3.5 cents per share, fully franked, which was steady on pcp. The record date and payment date for the dividend stand 30^th August 2019 and 20^th September 2019, respectively.


Profit & Loss (Source: Company Reports)

What to Expect: For FY19, the company is focusing on pre-synergy operating expenditure growth target of between 5% and 7%. Additionally, the company is anticipating a capital expenditure in the range of $55 Mn -$70 Mn. The company stated that the Out of Home sector is expected to continue to gain market share across media formats. It has provided guidance in relation to underlying EBITDA in the range of $125 Mn to $135 Mn for CY19, which excludes integration costs and pre changes for AASB16. OML is anticipating reduced debt, and positive cash flows in 2H and targeting gearing below or approaching 2.0x in 2020.

Stock Recommendation: The company’s overall strategy would continue to deliver long term sustainable revenue and earnings growth to maximise shareholder value creation. The gearing of the company stood at 2.7x. Coming to the stock’s performance, it produced returns of -29.40% and -26.68% in the time span of one month and three months, respectively. As per ASX, the stock is trading towards its 52-week lower levels of $2.290 with PE multiple of 19.06x and an annual dividend yield of 3.61%, indicating a decent opportunity for accumulation. Hence, considering the above-stated facts and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of A$2.910 per share (down 4.59% on 26^th August 2019, owing the release of 1HFY19 results which  stated fall in profits of 24% in 1HFY19 against the prior corresponding period).


OML Daily Technical Chart (Source: Thomson Reuters)
 

Australian Vintage Ltd

AVG Details

Resignation and Appointment of CEO: Australian Vintage Ltd (ASX: AVG) is into the business of winemaking, wine marketing as well as vineyard management. It has a market capitalisation of ~A$133.34Mn as on 26^th August 2019. Recently, the company, via a release dated 29^th July 2019, announced that Mr Neil McGuigan has resigned from the designation of Chief Executive Officer of the company, which will be effective from 20^th November 2019. It was also mentioned that the company has appointed Craig Garvin as CEO elect. Mr Craig Garvin would be appointed CEO on November 21, 2019.

In other update, the company announced that Allan Gray Australia Pty Ltd and its related bodies corporate, as investment manager for the funds or investment mandates had made a change to their substantial holdings in the company and the current voting power stood at 18.15% as compared to the previous voting power of 16.94%, which became effective on 19^th July 2019.

The company with the help of a release dated 30^th April 2019 reported total sales to the end of March 2019 with a rise of 9% on last year.InVintage 2019, it was stated that 83,000 tonnes of grapes were crushed, which reflects a fall of 11% on the last year and 28% on the expectation. The following picture provides an overview of the results for 1H FY19:

 
Results Summary (Source: Company Reports)

Future Aspects: The company stated that they are confident that long-term outlook for sales into Asia looks positive, but they need to manage the growth appropriately in terms of pricing as well as depletions.It expects net profit after tax and before SGARA (or Self Generating and Regenerating Assets)to be up by between 35% and 40% on last year assuming that there would be no material movement in exchange rates. After the impact of SGARA, the company is anticipating the Net Profit after tax to be in accordance with the previous year.

Stock Recommendation: The cash flow from operating activities was positive and stood at $10.9 Mn in 1H FY19 as compared to $11.0 million in 1H FY18. Coming to the stock performance, it produced returns of -1.04% and -3.06% in the time span of three months and six months, respectively. Currently, the stock is priced close to its 52 weeks low level of $0.420 with reasonable PE multiple of 13.57x, proffering a decent opportunity for accumulation. Hence considering the above-stated facts and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of A$0.475 per share on 26^th August 2019.


AVG Daily Technical Chart (Source: Thomson Reuters)

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