oOH!media Limited

OML Publishes Operational & Financial Highlights at AGM: oOH!media Limited (ASX: OML) is a Popular name in Out of Home media space.It offers advertisers the ability to create deep engagement between people and brands across one of the largest and most diverse Out of Home location-based portfolios in Australia and New Zealand. OML also owns a leading native content production company and digital printing operations.

It recently announced the appointment of Timothy Miles as an independent Non-Executive Director, effective from 16 May 2019. Mr Miles is currently a Non-Executive Director of New Zealand listed Genesis, Nyriad (a software enabled data storage tech business), UDC finance (New Zealand’s largest Finance business) and is Chair of the Gut Cancer Foundation. The Company expects that his experience both internationally and in New Zealand, notably in technology and digital development will add value to their existing skills and experience of fellow directors.

In its Annual General Meeting, OML presented its operating and financial updates. It highlighted that with the acquisition of Adshel (rebranded as Commute), it has entered into a highly complementary segment of street furniture and rail which further diversifies and improves OML’s network reach and frequency in key metropolitan and some regional areas. As per financial highlights for FY18, it reported an increase in revenue by 27% to $482.6 million. It was due to the increase in organic growth across the OML’s business and also three months’ revenue contribution from the Commute business. Its total underlying EBITDA was reported at $112.5 million, whereas the underlying EBITDA (ex-Commute) increased by 5% to $94.2 Mn.

Its total underlying NPATA increased by 18% to $51.1 Mn, reflecting organic growth and three months’ profit contribution from the Commute business, partially offset by its continued investment in its people and systems as part of its strategy to deliver sustainable growth for the future.The Board of Directors declared a fully franked final dividend of 7.5 cents per share, bringing the full year dividend to 11.0 cents per share fully franked. The Board also implemented a dividend reinvestment plan (DRP) which operated for the final dividend.


Segment’s Revenue Metrics (Source: Company Reports)

What To Expect:The company expects to see growth in its Out Of Home sector over the medium to longer term. Its guidance in February outlined an expected Underlying EBITDA of between $152 Mn and $162 Mn, excluding any integration costs incurred during 2019 and the impact from the change in accounting standards to AASB16, however, it took into consideration the expected market softening in Q2.

OML has targeted underlying growth in 2019 operational expenditure of no more than a 5-7 per cent range.Its capital expenditure is expected to be in the range of $55-$70 million for CY19, which is broadly in line with capital expenditure on a pro-forma basis in 2018 and noting that the business is committed to rolling out screen and infrastructure upgrades in both the Brisbane City Council precinct and Brisbane airport. The company wishes to reduce its leverage position taken on to partially fund the Commute acquisition.

Stock Recommendation:Its gross margin for FY18 stood at 46.8% better than the result in FY17 at 46.2%. Its EBITDA margin for FY18 stood at 23.3%. Its P/B multiple for Trailing Twelve Months (TTM) stands at 1.3x which is lower than the peer median of 1.5x. The stock price of the company is trading slightly towards the 52-week lower levels. Hence, considering the aforesaid parameters and current trading level, we recommend a “Speculative Buy” rating on the stock at the current market price of $3.850 per share (up 2.667% on May 17, 2019).  

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