Nine Entertainment Company Holdings Ltd (NEC) operates as a holding company, which broadcasts news and current affairs, sports, comedy, entertainment and lifestyle programs throughout Australia via its subsidiaries.
| Key Statistics | |||||||
| 52-Week Range | Avg. Daily Vol (3 Mo) | Market Value | Dividend Yield | Float % | Target Price | Consensus Rating (5 strong buy – 1 strong sell) |
Next Earnings Announcement |
| 0.80 – 2.58 | 6,941,747 | 4,161.20 | 4,1% | 91.7% | 2.66 | 4.40 | 26/02/2021 |
NEC operates across four segments, broadcasting, digital and publishing, Domain Group, and Stan. The broadcasting segment including program production across fee to air television and metropolitan radio networks in Australia. Digital and publishing includes Nine Digital, Metro Media, 9Now and other publishing titles including Pedestrian Group, CarAdvice and nine.com.au in the Broadcast Video on Demand (BVOD) market. The Domain segment is a real estate classifieds marketplace on domain.com.au and includes real estate media and services businesses. Stan includes its Subscription Video on Demand (SVOD) service. The company generates revenue through a combination of advertising and subscription services across these segments.
Revenue from continuing operates in 2020 was been impacted by the COVID-19 pandemic resulting in a weaker advertising market for the Broadcasting and Digital and Publishing segments, coupled with a decrease in listing volumes in Domain. These impacts were somewhat offset by increase revenue in the Stan segment from higher subscribers and price increases. Following the merger with Fairfax Media in 2018 NEC has successfully broadened its revenue from traditional broadcast television to higher-growth areas including Domain and Stan.
With consumer behaviour moving to on-demand consumption, NEC’s focus on growing digital and subscription revenue will help drive success going forward. 50% of group EBITDA is attributable to the digital businesses with management targeting 60% by 2024 along with a 35% target of revenues from subscriptions, reducing exposure to advertising. The SVOD and BVOD markets should continue to grow rapidly as consumers continue to shift to on-demand consumption, NEC is well positioned within the BVOD market controlling roughly 50% market share.
For the financial year ending June 2021 revenue is forecasts to rise +5.1% to $2,281.1m followed by a further +4.8% in 2022 to $2,389.8m. Earnings per share is expected to rise from -$0.03 in 2020 to $0.12 in 2021 and $0.13 in 2022. Based on these estimates the stock trades on forward P/E multiples of 21.0 and 19.1 for 2021 and 2022 respectively, slight discounts to the peer group averages of 21.4 and 20.1.
The average target price of analysts covering the stock is $2.66 with 80% of analysts rating the stock as a buy, compared to 10% as a sell and 10% as a hold.
