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Nation Media Group - BUY Recommendation
Rank: Chief Joined: 5/31/2011 Posts: 5,121
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We upgrade our recommendation on Nation Media Group Limited (NMG) to a BUY based on a fair value of KES 367.00, representing a 15.1% upside to current market price. We believe that the broadcasting (3 year CAGR of 18.9% in revenue) and digital segments will drive top line growth going forward, even as growth in the newspaper and magazines business takes a dip (+15.6% y/y in FY13F, +10.0% y/y in FY14F, +8.5y/y in FY15F). This will be supported by Ad spend growth in East Africa on account of improved economic performance as well as market share gains in Uganda, Tanzania and Rwanda. Additionally, cost containment measures by the company coupled with investment in new printing presses will see the EBITDA margin strengthen (+470bps to 33.5% in FY13F), consequently driving bottom line growth (3 year CAGR of 15.8%).
Positives:
· Broadcasting business to drive top line growth
· Election related spending to boost FY13 performance
· Stronger Kenya Shilling to support gross profit margin enhancement
· Attractive valuation
· Economic recovery to boost Ad spend growth
· Growth in newsprint business to decline as circulation matures
· Digital media, a strong growth area
· EBITDA margin to strengthen on the back of cost management
· Strong market share
· Pan Africa expansion still on course
· Strong cash position
· Bonus Issue to increase liquidity
Risks:
· Volatility in newsprint costs
· High cost of insurance
· Foreign exchange risk
· Human capital a major concern
· Looming competition after switch to DTT
(source: Kestrel Capital - 30.05.2013)
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Rank: Member Joined: 2/8/2007 Posts: 808
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Just wondering what adjusting for the adspend by the very many commissions that were getting operationalized and IEBC would mean to revenues going forward and valuation. Me thinks results for 2012 may have been one off!
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Nation Media Group grows its online platforms in leaps and bounds  http://www.businessdailyafrica....290/-/ceo80/-/index.html
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Kausha wrote:Just wondering what adjusting for the adspend by the very many commissions that were getting operationalized and IEBC would mean to revenues going forward and valuation. Me thinks results for 2012 may have been one off! Me thinks most of the adspend was recorded in Q1 2013 hence the coming results for H1 2013 will be outstanding coz of this one off revenue. This should also present a case for an extra juicy interim dividend this time round.
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Rank: Member Joined: 2/8/2007 Posts: 808
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@mweke...you also forget the 1Q13 election related expenditure is more than offset by the lull in adspending by most organizations running Jan - Dec year ends. Q1 was largely let to sink. You are now seeing ads coming out of the woodwork which may end up producing a normal year.
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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@Kausha may be on to something... Interesting also to see segments are only Print (newspaper, magazines)or Broadcast (tv, radio). All the fuss with Digital but it's still a midget (5% revenue, ??% profit) which is added up to Print. Revenues only from Circulation (40%) and Advertising (60%). Ehh, it's the content stupid 
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Rank: Member Joined: 7/17/2008 Posts: 152
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How come NMG announced bonus shares which was approved by the AGM and the share price has adjusted to ex-bonus but the company has refused to credit the bonus shares because the same has not been approved.
What happens if this further approval is not granted?
Does it mean those who bought at cum-bonus price were conned?
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Rank: Elder Joined: 6/20/2012 Posts: 3,855 Location: Othumo
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This market is funny, I have a purchase order @300 which has not been picked. Do I cancel and re-order? Thieves
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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King G wrote:This market is funny, I have a purchase order @300 which has not been picked. Do I cancel and re-order? Your purchase order did not get to market. Huyo broker wako anakuchezea. Who is he
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Rank: Elder Joined: 6/20/2012 Posts: 3,855 Location: Othumo
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mwekez@ji wrote:King G wrote:This market is funny, I have a purchase order @300 which has not been picked. Do I cancel and re-order? Your purchase order did not get to market. Huyo broker wako anakuchezea. Who is he Suntra.... through Tangaza321.com/trading platform Thieves
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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King G wrote:mwekez@ji wrote:King G wrote:This market is funny, I have a purchase order @300 which has not been picked. Do I cancel and re-order? Your purchase order did not get to market. Huyo broker wako anakuchezea. Who is he Suntra.... through Tangaza321.com/trading platform That system is bogus!!! In KE there are only two online trading platforms: 1. CFC 2. D&B
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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But, but si Scangroup ndo baba yao? Can't Ogilvy Africa + Scanad Naija make another ARM type of capacity boost? (powered by RSA & other WPP brand clients moving up & into SSA respectively??)
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Rank: Elder Joined: 6/20/2012 Posts: 3,855 Location: Othumo
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@mwekez@ji thanks bro. for the advice. will review and see if to move. Thieves
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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King G wrote:@mwekez@ji thanks bro. for the advice. will review and see if to move. ... welcome bro. cheers
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Kestrel Capital on 30.05.2013 wrote:
Positives:
· Digital media, a strong growth area
Read: More digital ads expected with the new-look nation.co.ke website >>> http://www.businessdailyafrica....86/-/qm74xj/-/index.html
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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Cde Monomotapa wrote:But, but si Scangroup ndo baba yao? Can't Ogilvy Africa + Scanad Naija make another ARM type of capacity boost? (powered by RSA & other WPP brand clients moving up & into SSA respectively??) B-) July 11th @60.50
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Cde Monomotapa wrote:Cde Monomotapa wrote:But, but si Scangroup ndo baba yao? Can't Ogilvy Africa + Scanad Naija make another ARM type of capacity boost? (powered by RSA & other WPP brand clients moving up & into SSA respectively??) B-) July 11th @60.50 Over the past 1 year, NMG share has outperformed Scangroup  Btw, have you tried to work out Scangroup fair value? .... #TA, Scangroup faces a tough resistance at 75 and WPP have consequently capped Scangroup share price at 85.85. NMG is uncapped  ... NMG is uncapped, and has reasonable dividend and bonus issues too  In short, what am saying is that NMG is the baba yao investment. If you believe otherwise, convince me
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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@mwekez@ji From the perspective that statistically most media buying is done via Agency and Scangroup's known dominance therein, that makes me say ndo baba yao. I admit to not looking at NMG as an investment but was highlighting that July to date, Scan has had a good run. 60.5 to 86 is a 42% return btw.
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Cde Monomotapa wrote:@mwekez@ji From the perspective that statistically most media buying is done via Agency and Scangroup's known dominance therein, that makes me say ndo baba yao. I admit to not looking at NMG as an investment but was highlighting that July to date, Scan has had a good run. 60.5 to 86 is a 42% return btw. ;-) Do you see the counter hitting 86? @Rich thinks the share price should leave a 10%-15% discount to that price meaning 75 remains the barrier. .... Besides, WPP could have overvalued scangroup knowing they are getting compensated in the 72.7M share swap arrangement
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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mwekez@ji wrote:Cde Monomotapa wrote:@mwekez@ji From the perspective that statistically most media buying is done via Agency and Scangroup's known dominance therein, that makes me say ndo baba yao. I admit to not looking at NMG as an investment but was highlighting that July to date, Scan has had a good run. 60.5 to 86 is a 42% return btw. ;-) Do you see the counter hitting 86? @Rich thinks the share price should leave a 10%-15% discount to that price meaning 75 remains a tough barrier. .... Besides, WPP could have overvalued this counter knowing they are getting compensated in the 72.7M share swap arrangement OK. @86, we'll just have to see and yes, as per the cautionary statement, it was expressly stated that WPP is paying the premium as a 'compensation' for intending to become the majority holder.
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