Full-Year Results, Acquisition & More- NWS, REA, QMS, TLS & TPM

Full-Year Results, Acquisition & More- NWS, REA, QMS, TLS & TPM

In this article, we would discuss five stocks from the Communication Services Sector. On 9 August 2019, some of the ASX listed stocks reported full year results 2019. The S&P/ASX 200 Communication Services (Service) last traded on 9 August 2019, up 0.38 % or 5.1 points, and the Australian Benchmark S&P/ASX 200 last traded at 6,584.4, up by 16.3 points or 0.2% from the previous close.

News Corporation (ASX: NWS)

On 09 August 2019, the company released the Q4 & full year results for the year 2019 ended on 30 June 2019, on ASX. Accordingly, the revenues of the company were $10.07 billion, up by 12% from $9.02 billion in the previous year, which depicted the growth in digital real estate, and consolidation of Foxtel. Besides, the company’s net income stood at $228 million against a loss of $1.07 billion in the previous year. Subsequently, the reported diluted EPS was $0.26 against a loss of $2.60 in the previous year.

Reportedly, the subscriber base for The Wall Street Journal reached 2.6 million, and digital subscribers accounted for approximately 69% of the subscribers. Also, the book publishing segment reported a record EBITDA, and the strategic investments into Opcity and Hometrack Australia proved to be a boost for the Digital Real Estate Services segment.

Admittedly, the Q4 depicted subdued sentiments in the revenues, which were down by 8% over the similar period in the previous year owing to negative impacts of currency fluctuations, lower revenues from segments and transition into new revenue recognition standard.

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Consolidated Statement of Operations (Source: Company’s Announcement)

As per the release, the company announced an unfranked dividend of USD 0.10 per share for the class A & B, and the dividend is scheduled to go Ex on 10 September 2019, with record date on 11 September 2019. Besides, the dividend would be paid on 16 October 2019. Importantly, the dividend is an estimated dividend, and the information related to the FX rate would be provided on 4 October 2019.

On 9 August 2019, NWS’ stock, by the closure of the trading session, was at A$19.87, up by 1.12% from the previous close.

REA Group Limited (ASX: REA)

On 9 August 2019, the company reported results for the year ended 30 June 2019. Accordingly, the revenue growth in core operations was 8% to reach $874.9 million over the previous year, and the EBITDA growth in core operations was 8% over the previous year to reach $501.2 million. Subsequently, the reported net profit decreased by 58% to reach $105.3 million.

Core & Reported Results (Source: Company’s Announcement)

As per the release, in Australia, the company achieved growth amid subdued market backed by price changes , improved product mix. Also, the commercial & developer grew by six per cent in revenues, media, data & other revenues increased by 16%. Besides, the financial services revenue was down by 8% to $27 million, and the company increased the ownership to 100% in Smartline after procuring the remaining stake for $16 million.

Reportedly, in Asia, the company achieved a revenue of $48.6 million, and EBITDA of $7.4 million. Also, the company owns 13.5% interests in Elara in India, which delivered revenue growth of 54%. Besides, the non-cash impairment was $173.2 million for the first half of 2019 and $15.7 million reductions in Elara. In North America, the company has 20% stake in Move, Inc. and it reported revenue growth of 7% to USD 484.1 million and share of losses stood at $8.4 million.

As per the release, the company declared a fully franked dividend of 63 cents per share, which takes the total dividend for FY2019 to 118 cents per share.

The below figure presents the schedule for the dividend payment.

Dividend Schedule (Source: Company’s Announcement)

On 9 August 2019, REA’s stock last traded at A$96.64, up by 5.56% from the prior close.

QMS Media Limited (ASX: QMS)

On 9 August 2019, the company provided an update on acquisition & funding. Accordingly, the company, via its subsidiary – QMS Sport Holdings Limited (ASX: QMS), entered into an agreement to wholly-acquire TLA Worldwide (Aust) Pty Ltd and TLA – ESP Limited (UK) along with Stride Sports Management Holdings Pty Ltd (Stride).

Reportedly, the acquisition means an investment of A$32.7 million for TLA and Stride, and by the end of CY2020, the expected synergies would be in the range of $1-2 million. Also, the acquisitions are anticipated to be EPS accretive in CY2019 at an EV/EBITDA multiple of 5.3x.

Besides, TLA and Stride have a leading position in talent management, sports marketing, merchandising, and the acquisition would improve the footprint of QMS global sports platform. Meanwhile, sport remains one of the largest and high growth segments in the market.

QMS Sport (Source: AGM Presentation, May 2019)

 

Funding

As per the release, the acquisitions would be funded via a private placement of fully paid ordinary shares in the company. Also, it would raise approximately A$12 million, and the balance would be sourced from the bank facility. Further, the receipts from NZ capital return are expected in Q3 CY 2019, and the balance would be utilised to repay the banking facility.

Trading

Reportedly, the EBITDA for the QMS Sport business in H1CY2019 is anticipated between A$11 to A$11.5 million, which is above the A$9 million forecasts of February 2019. The company would provide detailed information during half-year results.

On 9 August 2019, QMS’ stock last traded at A$0.885, down by 2.747% from the previous close.

Telstra Corporation Limited (ASX: TLS)

Last year, the company released its full-year results on 16 August 2018. This year, the investors would be anticipating the results to come out very soon. Besides, the company, on 5 August 2019 had notified on the retail shareholder meeting, which had been scheduled on 3 September 2019.

On 29 May 2019, the company had notified about the non-cash impairment related to the legacy IT assets. Subsequently, it was reported that the company anticipates lowering down the value of IT assets by $500 million, and escalated restructuring costs by around $200 million.

Income by Product (Source: Half Year Presentation, February 2019)

In Mid-February, the company released half-year results for the financial year 2019. Accordingly, the company’s reported the total income standing at $13.8 billion, down by 4.1 per cent, reported EBITDA was down by 16.4% to $4.3 billion, and NPAT was down by 27.4 per cent to $1.2 billion.

On 9 August 2019, TLS’ stock last traded at A$3.98, down by 0.251% from the previous close.

TPG Telecom Limited (ASX: TPM)

The financial year close of the company is 31 July, and last-year the results for FY18 were released on 18 September 2019. Besides, the company has been amid legal proceedings for the merger with Vodafone Hutchison Australia Pty. Ltd.

The company has made the last release to the exchange on 24 May 2019, which was related to the merger approval of the companies. Besides, the company had half-year close on 31 January 2019. Subsequently, the results were made available to the market on 19 March 2019.

Half-Year Summary (Source: Half Year Presentation, March 2019)

Accordingly, the company’s reported EBITDA for the half-year 2019 stood at $192.6 million, against an EBITDA of $413 million for the half year period 2018. Besides, the reported NPAT was $46.9 million for the half-year 2019 compared with $198.6 million for the similar period in 2018.

Meanwhile, the total revenues of the company for the half- year 2019 were of $1,235.8 million against $1,254.6 million for the half-year 2018.

On 9 August 2019, TPM’s stock last traded at A$6.9, up by 2.071% from its last closing price.


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