Sky Network Television Limited

SKT Details

Sky Network Television Limited (ASX: SKT) is a leading digital multi-media company that provides sport and entertainment media services in New Zealand and overseas. Its market capitalization, as on July 14, 2021, stood at ~$291.729 million.

Results Performance (Half-Year ended 31 December 2020 – H1FY21)

The company’s revenue for H1FY21 stood at $356.9 million, a decrease of 7.3% on the previous corresponding period. After removing the direct impact of the pandemic and a one-month discount provided to migrating satellite reseller customers, revenue for the period was 3% lower on the pcp. Satellite revenue for the period was down by 9% whereas streaming revenue increased by 45% over the same period last year. Commercial revenue was reported down by 27% YoY due to the impact of the pandemic. Operating expenses for the period reduced by 18% YoY to $242.8 million. A sharper decline in operating expenses led EBITDA for the period to rise by 30% YoY to $116.3 million which in turn, helped NPAT for the period to register a growth of 234% to $39.6 million on the pcp.

Key Data (Source: Company Reports)

Recent Update:

The company, on 23 June 2021, informed that it has appointed James Bishop to the role of Company Secretary and Head of Investor Relations.

In another update of 23 June 2021, the company  announced partnerships with the NRL and New Zealand Rugby League (NZRL) through to the end of 2027.

Outlook:

The company continues to focus on revenue stabilization through satisfactory services to Sky Box customers and expects organic growth in Neon and Sky Sport Now, and ongoing recovery in advertising and commercial revenues. It will continue to focus on unlocking opportunities through renewed SANZAAR deal and a fulsome calendar of sports.

In the meanwhile,  the company has confirmed FY21 guidance provided in February 2021 of  revenue in the range of $695 million - $715 million, earnings before interest, tax, depreciation and amortisation (EBITDA) of  between $170 million - $182.5 million, net profit after tax (NPAT)  of between $37.5 million - $45.0 million, and capital expenditure in the range of $45 million - $55 million.

Key Risks:

The company is susceptible to financial risks that include market risk (currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The company uses derivative financial instruments to hedge the Group’s exposure to foreign exchange and interest rate risks.

Technical Overview:

Weekly Chart –

Source: REFINITIV

Note: Purple colour lines are Bollinger Bands® with the upper band suggesting overbought status while the lower band oversold status, and yellow lines are Fibonacci retracement lines which measure price rebound and backtrack. https://www.bollingerbands.com/

Experiencing low volatility, the stock has been trading in a narrow range provided by the upper Bollinger band of $0.170 on the upside and the lower Bollinger band of $0.149 on the downside for multi-weeks. While staying in the range, the stock has given close for the ongoing week at its low price of $0.155. The technical indicator RSI with a reading around 47 and a curve pointing down at the end, suggests softening of bullish momentum for the stock.

Going forward, the stock may have resistance around $0.170 whereas support could be around $0.149.

Stock Recommendation:

The company made significant progress towards stabilising the Sky Box subscriber base, including a net increase in direct customers, while also continuing to grow streaming revenue. Permanent cost savings from a range of initiatives would continue to positively impact the company’s operating and net profit.

Considering the aforesaid facts and future development plans, we give a “Hold” recommendation on the stock at the current market price of $0.155 per share on July 14, 2021.

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

Note 2: Investment decisions 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 analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

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