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Nine Entertainment. Releases FY19 Statement, Showing Strong Results.

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Nine Entertainment Co (ASX: NEC) is an Australian Media and TV network company, with multiple channels on free to air TV and multiple media outlet subsidiaries.

NEC

 

What are the results from Nine FY19?

Today (Thursday 22nd of August 2019) Nine released its FY19 annual results. The main points are as follows:

  • Revenue (Pro Forma) for FY19 is A$2341.7 million, down by 1% from FY18.
  • Group EBITDA (Pro Forma) for FY19 is A$423.8 million, up 10% from FY18.
  • NPAT for FY19 (Pro Forma) is A$224.8 million, up 9% compared with FY18 NPAT.
  • Fully diluted EPS is 11.6 cents per share for FY19, up 16% from FY18.
  • The final dividend is 5 cents (fully franked) bringing the full year dividend per share is 10 cents, unchanged from FY18.

Specific results on company operations are as follows:

  • In FY19 Nine attracted the highest commercial network share in Australia with 38.3% of the 25-54 demographic.
  • 9now had 50%+ revenue growth and leads the Broadcast Video on Demand (BVOD) market in Australia.
  • Coming into FY20, Stan has over 1.7 million active subscribers.

 

What were the drivers of this result?

A main driver of the result for Nine was Domain, the property publishing subsidiary, who had strong growth in Yield and depth and strong cost focus in a challenging market.

A large increase in Digital and Publishing revenue contribution from Nine’s subsidiaries in FY19 compared to FY18 brought further positive results.

The loss of the FTA TV rights did reduce Nine’s premium revenue results, however due to growth and acquisition of tennis rights, this partially offset the losses.

 

What is the outlook for Nine?

Free to Air (FTA) market conditions are expected to strengthen from September onwards, thus results are expected to improve into Q2.

The FTA market is expected to decline by low single digits over FY20 however, but this will be partially offset by growth of at least 1 revenue share point.

Publishing and Digital is expected see ongoing growth in FY20, driven both by further cost efficiency gains in Metro Media, top line growth and, continuing strong growth at 9Now.

In terms of the FY20 result, assuming the market conditions above and incorporating previously detailed merger synergies, Nine is expecting to report Pro Forma Group EBITDA growth on a continuing business basis of around 10%.

 

What is the market reaction?

The initial market reaction to Nine’s FY19 results is positive. The current share price is trading at A$1.94 which represents a 7.76% Increase (2:50 pm AEST).

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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