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OOH!Media Limited – OOH! Media Limited Financial Impact Of COVID-19

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

OOH!Media Limited (ASX: OML) is a leading media company across Australia and New Zealand that creates deep engagement between people and brands through unmissable out of home advertising solutions. OOH, offers connected offline and online ecosystems that make brands unmissable across a network of over 30,000 plus locations across Australia and New Zealand. OOH has a market capitalisation of A$250 million.

What is the most recent update on COVID-19 outbreak?

The Coronavirus (COVID-19) was first reported from the Wuhan province in China on 31 December 2019. The World Health Organisation (WHO) has announced a total of around 179,000 confirmed cases and around 7,400 deaths globally. As of Wednesday (18 March 2020), the Federal Government has upgraded its travel advice ban to a ‘Level 4’ for the entire globe due to the outbreak of COVID-19, for the first time in Australia history. WHO has declared Europe the epicentre of the pandemic with Europe reporting more cases and deaths than the rest of the world combined, apart from China.

 

Update on share price

In the last month, OOH share price has fallen by 66.7% and has an annual dividend yield of around 10.6% (fully franked). OOH is currently trading at around A$1.00. The unfavourable results are due to market uncertainty caused by the COVID-19 outbreak.

 

How is Coronavirus affecting OOH?

The deteriorating macroeconomic conditions and resultant market uncertainty caused by COVID-19 has huge implications for OOH during this difficult trading period. Consequently, under its continuous disclosure obligations, OOH has withdrawn its FY20 earnings guidance for the time being on Monday 16 March 2020.

OOH is taking decisive action to proactively manage through this difficult trading period to ensure the media company is well positioned for when conditions stabilise and continues to make every effort to achieve the prior earnings. More specificity, OOH will begin to re-prioritise capital expenditure and will now be materially below the bottom of the previous guidance range of A$60-70 million.

 

What is the outlook for OOH

Given the uncertainty caused by COVID-19, forecasting full year revenue in the current market environment difficult. Additionally, this is particularly relevant for OOH given the media company has nine months remaining in its finical year to December 2020.

Despite OOH share price down 66.7% over the past month, OOH revenue for the year to date has been in line with the prior corresponding period. OOH’s performance in the first quarter is consistent with delivering the FY20 earnings guidance provided at the full year results of 24 February 2020. OOH will remain vigilant on controlling costs and is maintaining and implementing strict cost and cash-flow practises throughout this difficult trading period. Once market conditions stabilise, OOH will seek to reinstate earnings and capital expenditure guidance.

 


 

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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