The Changing Scenario for Media Stocks – OML, SVW, SXL

The Changing Scenario for Media Stocks – OML, SVW, SXL

Due to the prevailing market situation caused by COVID-19, the businesses of most of the companies have been impacted considerably. The share prices of the companies have dropped significantly. In this situation, the government, as well as the companies, have started implementing the measures to prevent the spread of the virus.

Most of the companies are implementing strategies to reduce the expenses, or they have decided to withdraw their guidance.

In this situation, the important thing is that the business should continue. For this, the companies have already implemented various plans and strategies.

In this article, we would be looking at the recent development in the below companies from the media space amid COVID-19.

oOh!media Limited (ASX:OML)

oOh!media Limited is a leading media company throughout Australia and New Zealand. OML is a leader in the Out of Home space in both the countries as well.

On 9 April 2020, oOh!media Limite released an ASX announcement where it highlighted that HT&E Limited (HT&E) has purchased circa 11 million OML shares as at the latest share register obtained by the Company for 6 April 2020. The number of shares acquired by HT&E Limited represents ~ 1.8% of OML’s issued capital post the completion of OML’s equity raising.

On 27 March 2020, the Company announced the completion of the Placement to institutional & sophisticated investors as well as the institutional component of its 1 for 1 fully underwritten accelerated non-renounceable pro rata entitlement offer of the fully paid ordinary shares in OML. Through this Placement & the institutional part of the Entitlement Offer, the Company had raised $156 million, and each share under the Placement was offered at $0.53 per new share.

As per OML, the acquisition of OML shares by another participant in the Australian media sector reflects the strategic value of OML’s assets, and according to the view of the Company’s Board’s, the Company remains significantly undervalued based on present trading prices of the shares.

At the same time, OML confirmed that it did not have any interaction with HT&E pertaining to its shareholding and considered this acquisition of shares as entirely opportunistic. However, the Company would obey with its disclosure commitments.

Apart from this, the Company further updated on the Annual General Meeting date. In light of the impact of coronavirus along with the changes to Directors, the Company has rescheduled its Annual General Meeting date to 4 June 2020. The Company would provide more details related to the AGM in the Notice of Meeting.

On 9 April 2020, OML last traded at $0.76, zooming up by 19.685% from its last close.

Seven Group Holdings Limited (ASX:SVW)

Seven Group Holdings Limited is a top Australian diversified operating as well as investment group which has market leading businesses & investments in industrial services, media & energy.

On 8 April 2020, Seven Group Holdings provided a trading update for FY20 for its key businesses amid COVID-19.

The Company, in its announcement, highlighted that its key focus during this time is the safety and welfare of its employees, and at the same time assist its customers. It also highlighted that protection of the business via appropriate strategies is also the key focus. All these factors help in strengthening the balance sheet of the Company during the period when the market is highly volatile.

Because of the uncertainty surrounding the trading circumstances pertaining to the effect of present and, especially, the potential additional COVID-19 measures, the Company decided to withdraw its FY2020 market guidance.

SVW’s MD & CEO, Ryan Stokes stated that like most of the businesses in Australia, the Company’s business would be impacted by the consequences of the substantial increase of the actions taken by Governments to lessen the rate of COVID-19 spread. Presently, the Company has taken steps to safeguard its people.

He further highlighted that there was a limited impact of COVID-19 on WesTrac, where mining & construction activities had been largely not impacted. The YTD revenue improved by 15% as compared to the previous period and 5% on budget. Coates Hire’s general hire operations had been performing as expected, events revenue had been reduced as well.

The Company mentioned that it was in a strong position and had $803 million of undrawn facilities along with cash of which $430 million have been committed.

By the end of the trading session, on 9 April 2020, SVW was at $14.030, climbing up by 11.173$ compared to its last close.

Southern Cross Media Group Limited (ASX:SXL)

Southern Cross Media Group Limited is the biggest entertainment company in Australia. It has the potential to reach across over 95 percent of the population in Australia via its mediums like radio, TV & digital assets. The Company has eighty-six radio stations along with further 10 digital radio stations across metropolitan & regional Australia & represents an extra thirty-six local radio stations.

On 7 April 2020, Southern Cross Media Group Limited announced the completion of fully underwritten Placement to institutional & sophisticated investors along with the institutional part of its 1.75 for 1 accelerated pro-rata non-renounceable entitlement offer.

Through this offer, the Company anticipates raising around $169 million before cost.

From the Placement & institutional part of the Entitlement Offer, the Company raised ~ $49 million. Under this offer, the Company issued each share at $0.09.

On 6 April 2020, the Company notified the market that it implemented a series of capital structure. It took operational initiatives to improve its liquidity and at the same time, support a more appropriate and effective operating model. Below is the table showing the initiatives taken up by the Company.

A Glance at FY2020 Trading to 31 March 2020:

Initiatives Towards Saving of Operating Expenses:

Southern Cross Media Group has taken initiatives to remove non-revenue related costs from CY20, which ranges between $40 to $45 million. Below are the initiatives:

  • Salary / Bonus Reductions: $20 million to $23 million
  • Marketing, Programming and Other Costs: $20 million to $22 million.

Other than this, the Company has deferred non-essential capital expenses, lowering its expected capital expenses for FY2020 to range from $17 million to $18 million.

The Company also cancelled its interim dividend  for the financial year 2020, which it announced earlier.

On 9 April SXL last traded at $0.130, zooming up by 18.182% compared to its previous close.

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