Nine Entertainment Co. Holdings Limited

Key Takeaways from Macquarie Conference Presentation: The communication service sector company, Nine Entertainment Co. Holdings Limited (ASX: NEC) is engaged into television broadcasting and program production, etc. The market capitalisation of the company stood at ~A$ 3.43 Bn on 14th June 2019. Recently, the company had published its Macquarie presentation wherein the company communicated about the four key pillars, i.e., broadcasting, digital & publishing, Stan, and Domain. With respect to the broadcasting business, NEC is a creator of Australia’s leading broadcast brands, throughout the television and radio. The Stan business is Australia’s leading local SVOD business. When it comes to Domain business, it is an evolving Australian property marketplace. With respect to Stan, it was mentioned that it is well placed Local SVOD player wherein it had built a business of scale in a new category in just four years as well as it is a clear local leader in the market with 1.5m-plus active subscribers. In Q3FY19, the broadcasting business witnessed a revenue growth of ~4% in Free to Air (FTA) wherein the Nine’s share stood at 40.9%.

On the other hand, the company with the help of a release updated the market players about the notice of initial substantial holder wherein the Vanguard Group (The Vanguard Group Inc and its controlled entities) have become an initial substantial holder on 30th May 2019 with the voting power of 5.004%.

Stans Profitability (Source: Company Reports)

Future Aspects: The key drivers in FY20 are expected to be revenue growth of ~ $25 million at 9Now. The company is expecting to continue the overall positive momentum. With respect to Stan business, it expects cash flow and EBITDA break-even from March. However, in the Domain business, it is improving its cost profile.

Stock Recommendation: In the Stan business, it had witnessed continuous growth in subscribers notwithstanding exceptionally strong summer as well as increase in price in February. The Gross margin of the company stood at 39.3% in 1HFY19, which reflects YoY growth of 5.5% while the current ratio of the company stood at 1.78x in 1HFY19, witnessing a YoY growth of 7.7%. This represents that the company is in a decent position to address its short-term obligations.

With respect to the stock’s past performance, it had generated the return of 10.50% and 34.68% in the time span of one month and six months, respectively.

Considering the above-stated facts and decent outlook, we give a “Buy” recommendation on the stock at the current market price of A$2.000 per share (down 0.498% on 14th June 2019).

SportsHero Limited

New Mobile Application: SportsHero Limited (ASX: SHO) is involved in the development of its sports gamification platform where users can predict, compete, and interact on major sports virtually and in real-time. The company with the help of a release dated 4th June 2019 updated the market players about its white label digital platform, which is recently developed for the PSSI, is ready for the submission to Apple App Store and Google Play following final beta testing.

The company had inked an exclusive agreement with PSSI (Football Association of Indonesia), which is one of the world’s leading sports federations. This exclusive agreement can potentially transform 80 million Indonesian football fans into engaged consumers of digital content.

In 2018, the total Australian sports betting revenue stood at $4.9 Bn. The Joint Venture with the Cross Bet Holdings Pty Ltd is delivering expertise and experience in the Australian gaming and bookmaking market.The joint venture is being managed by Scott Cross who had proven industry experience and expertise. Following picture gives the idea of the company’s competitive landscape:


Competitive Landscape (Source: Company Reports)

What to Expect:  The company is planning to test live streaming with PSSI in July 2019. It has planned major prospects in August 2019 such as it is planning to launch V2 PSSI as well as rollout of LaLiga season 2019/20. The company’s sports betting launch in Australia has also been planned for August 2019.

Stock Recommendation:On the stock’s performance front, it had witnessed a negative return of 10.29% and 49.17% in the time span of one month and six months, respectively. It is also important for the investors to know that the stock is trading closer to its 52-week lower levels, indicating a decent opportunity for accumulation. Hence, considering the aforesaid facts and current trading level, we give a “Speculative Buy” rating on the stock at the current market price of A$0.069 per share (up 13.115% on 14^th June 2019).
 

Tinybeans Group Ltd

Awarded as “App of the Day”: Tinybeans Group Ltd (ASX: TNY) is involved into the provisioning of mobile and web-based social media platform that enables the parents to record and share precious moments and milestones with family and friends privately and securely. On 6th June 2019, the company with the help of release stated that it had been selected by Apple as a“App of the Day” in France, Brazil and Australia and including 73 more countries. There are only less than 500 apps in the world which are featured as App of the Day every year.  The cash burn is improving in each quarter and itstood at US$467K in Q3FY19 as compared to US$686K in Q2. The cash balance stood at US$1Mn as at 31st March 2019.

Reduction in Quarterly Cash Burn (Source: Company Reports)

Future Guidance: The company is expecting the cash burn in the range of US$200k- US$300K for Q4FY19. It expects to maintain a positive cash balance through to turning cash flow breakeven by the end of calendar 2019. TNY is expecting no increase in the cost base for the remainder of the calendar year.

Stock Recommendation: The company is anticipating positive revenue for 2HFY19. The direct brand advertising pipeline is more than US$1.5Mn with Q4 projects being focused on increasing programmatic revenues.

On the stock’s performance front, it had witnessed a rise of 13.33% and 325.0% in the time span of one month and six months, respectively. As per ASX, the stock is trading slightly towards its 52-week higher levels and any correction in the near term can offer a good entry opportunity. Hence, we put our wait and watch stance on the stock at the current market price of $1.190 per share (down 0.833% on 14 June 2019). 

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