Seven West Media Limited (ASX: SWM)

SWM is a media & entertainment company, engaged in free to air television broadcasting, digital streaming, and newspaper publishing. As on 1^st November 2021, the market capitalization of the company stood at $718.38 million.

Financial and Operational Highlights: Recently, the company has reached a Share Sale Agreement for the acquisition of all the business and related assets of Prime Media Group through the acquisition of Prime Television (Holdings) Pty Ltd, Seven Affiliate Sales Pty Ltd and all their subsidiaries for a cash consideration of A$131.88 million, which indicates a premium of 57% to the closing PRT share price on 29 October 2021. SWM has also refinanced its syndicated debt facility, which resulted in achieving important milestone in SWM’s transformation and indicates the significant achievements in the past 24 months, which include a reduction in net debt by 57% to $240 million. For the year ended 26 June 2021, the company recorded a rise of 141% in underlying group EBIT to $229 million. The company’s digital revenue soared by 78% on a YoY basis, backed by BVOD market growth of 55% and 5% points in share gains during FY21.

Technical Analysis: On a daily chart, SWM price witnessed a steep rally from the low of AUD 0.375 to a high of AUD 0.55 tested on 01 November 2021. Currently, prices are sustaining below the horizontal trend line resistance level at AUD 0.555 and facing the resistance of the same. Moreover, the momentum oscillator RSI (14-period) is trading in an overbought zone at (~77.97 level) which might indicate the possibility of a downside correction from the higher levels. The important support level of the stock is placed at AUD 0.465 while resistance level is at AUD 0.59.

The share of SWM has rose by 13.75% and 24.65% in the past one and nine months, respectively. The stock is trading near to its 52-week high level of $0.59. On the back of the price movement in the past months, current trading levels and other technical factors, we suggest investors to book profit on the stock and therefore a “Sell” stance is suggested. The stock was analysed at the current price of AUD 0.550 per share, 2:30 PM (GMT+10), Sydney, Eastern Australia, as of 1^st November 2021.

Daily Technical Chart – SWM

Source: REFINITIV

Note: The purple colour line in the chart depicts RSI (14-period).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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