Seven West Media Ltd
SWM Details
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Expanding digital portfolio:Seven West Media Ltd (ASX: SWM) stock continued to rise 4.7% on August 12, 2016. SWM has met the FY 16 full year guidance with Profit after tax of $207.3m (excl. significant items) down 0.9%. Moreover, Olympics is expected to underpin the robust Television market share growth and the Television advertising market will be flat to down to low single digits year on year. The program sales and 3rd party productions are expected to deliver greater than 25% growth and the Digital is expected to deliver greater than 150% revenue growth. Additionally, SWM is expanding its presence in the creation of content in international markets with an investment in a British drama production company, expanding production into New Zealand and is currently progressing with several opportunities in other territories. SWM’s production portfolio is continuing to grow, securing major commissions including My Kitchen Rules for the UK and US and Border Security for the US. In addition, SWM is expanding its presence in the delivery of content anywhere, anytime, on any screen with the launch of live-streaming and rapidly expanding digital portfolio. Lately, the Australian Competition and Consumer Commission has released a statement of issues on the proposed acquisition of The Sunday Times and perthnow.com.au from News Corporation (ASX: NWS) (News) by West Australian Newspapers (WAN), a wholly owned subsidiary of SWM. Meanwhile, SWM stock has fallen 34.93% (as of August 11, 2016) in last three months.
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Recommendation: Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $0.78
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Third Party Production and Program Sales Revenue (Source: Company Reports)
Baby Bunting Group Ltd
BBN Details
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Strong FY16 results: Baby Bunting Group Ltd (ASX: BBN) stock rose 7.75% on August 12, 2016 after the company reported the FY 16 results. BBN has reported 31.4% growth in the total sales to $236.8 million and pro forma EBITDA growth of 51.1% to $18.7 million in FY 16 as compared to the FY 15. BBN has exceeded the FY16 prospectus forecasts. Moreover, in FY 16, BBN has opened five new stores and rolled out new initiatives, thereby the comparable store sales grew 12.5%. BBN’s Pro forma net profit after tax (NPAT) grew 55.8% to $10.6 million on the prior corresponding period. Additionally, BBN in FY 17 is expecting EBITDA to be in the range of $21.5 million to $24.5 million, representing growth in the range of 15% to 31%. BBN has planned four to eight new store openings in FY 17. Four new store leases have been signed and the stores are expected to be open before February 2017. On the other hand, comparable store sales growth as at 7th August 2016 is 15% year to date, which is expected to moderate to be more in line with the long term historical average (mid-single digit). Meanwhile, BBN stock has risen 15.92% in last three months (as on August 11, 2016) placing them at unattractive levels.
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Recommendation: Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $3.06
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