HT&E Limited

HT1 Details

Key Business Update: HT&E Limited (ASX:HT1) is involved in the media and entertainment business with a footprint in Australia and Hong Kong (HK). The company’s reportable segments include Australian Radio Network (ARN), HK outdoor (Billboard, transit, and other outdoor advertising), and Investments in Emotive Pty Limited and Soprano Design Limited.

HT1 Completes Disposal of OML Holdings: As announced on 02 November 2021, HT1 disposed entire shareholding of oOh!media Limited (ASX: OML) at $1.78/share, delivering gross proceeds of $49 million at capital gains of $31 million over the initial investment.

HT1 Settles Tax Matter with ATO: As announced on 29 October 2021, HT1 got relieved from its taxation dispute with the Australia Taxation Office (ATO) at a settlement of $71 million. The taxation dispute was in relation to New Zealand branch during FY09 – FY16. The matter involved considerable tax adjustment of $102.5 million, $49 million penalties and $43 million interest, all together totaling to $195 million. On 21 October 2021, HT1 reported a buy-back of 33,283 shares for $50,673.37.

H1FY21 Financial Performance

H1FY21 Financial Snapshot; Analysis by Kalkine Group

Key Risks

Constant competition form OTT platforms pose significant threat to radio networks, podcasting and streaming in Australia. Curtailed passing crowd due to substantial containment measures may pose substantial threat to outdoor advertising activities.

Outlook

HT1 plans to invest in the launch of new breakfast show in Melbourne and execute an original podcast content creation strategy. For the HK Outdoor/Cody segment, improved mobility levels and trending conditions continue.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation

The stock of HT1 gave a positive return of ~36.667% in the past one year. The stock is currently trading close to its 52-weeks’ high of $2.130. The stock has resistance level of ~$2.19 and support level of ~$1.830. The stock has been valued using the EV/Sales multiple-based illustrative relative valuation method and arrived at a correction of low single-digit (in percentage terms). The company might trade at some discount to its peers’ EV/Sales average, considering decline in barriers to entry and surged substitute platforms for advertisements. For valuation, few peers like Ooh!Media Ltd (ASX: OML), Enero Group Ltd (ASX: EGG), Nine Entertainment Co Holdings Ltd (ASX: NEC) have been considered. Considering pandemic risks, high sensitivity to equity markets, high exposure to outdoor advertisement activities, high competition from OTT platforms, decent approach to 52 weeks’ high, we suggest investors to book profits and give a “Sell” recommendation on the stock at the current market price of $2.11, as of 04 November 2021, at 01:14 PM (GMT+10), Sydney, Eastern Australia.

HT1 Daily Technical Chart, Data Source: REFINITIV

Note: The purple line reflects the RSI (14-day 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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