NEC Details
 
Cost reductions:Nine Entertainment Co. Holdings Ltd (ASX: NEC) reported a 6% fall in group EBITDA to $120 million for H1FY17. Free to Air Television (FTA) EBITDA was down 9% to $109 million while Digital EBITDA was up 13% to $14 million. Group revenue was down 5% on account of 4.5% fall in FTA market and Olympics impact on ad market and share. Network revenues were down 5% while digital revenue was impacted by absence of DMA. NPAT from continuing businesses (pre-specific items) was at $75 million. Statutory results included specific items of $312 million after tax with a $260 million non-cash impairment of goodwill and about $85 million (pre-tax) settlement to exit key elements of the output deal with Warner Bros. Statutory net loss after tax, inclusive of specific items, was $236.9 million. The company has declared fully franked interim dividend of 4.5 cents. On the other hand, group’s diversifying efforts are intact which are expected to deliver the benefits in the long run. NEC has witnessed dominant ratings performance post Olympics and there has been improvement in ratings performance for the start of season 2017. The cost management efforts have also led to a group-wide cost reduction of 4%. Further, NEC has reported for 71% growth in registered users and 74% growth in catch up streams at 9Now across six months. Strong subscriber additions at Stan, especially over summer has been an additional highlight.
 

Strategic Priorities (Source: Company Reports)
 
Outlook: The company expects that the positive start to Nine’s ratings year should begin translating to revenues in Q4 FY17 and provide a positive momentum into FY18. NEC also expects the FY17 FTA reported costs to be down 1.5%. Efforts are being made in order to achieve further efficiencies, with an additional $50 million reduction in costs targeted by FY19. Digital segment’s initiatives in 9Now, 9Honey and Car Advice, are said to progress well and the second half focus is to have more effective monetization. FY17 EBITDA is expected to be in the range of $158 million to $187 million. NEC stock has an outstanding dividend and has recovered over 9.38% in the last three months (as of February 28, 2017). The stock price was down 1.4% on March 01, 2017 but had risen about 8.8% in last five days (as at February 28, 2017). We recommend a “HOLD” on the stock at the current market price of $ 1.03

 
NEC Daily Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in:  BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.