Bidders believe that the ongoing auction of Nine Entertainment’s regional news business, Australian Community Media, could possibly have a potential impact on its 59% owned property portal Domain.
The future of ASX-listed real estate media and technology services company, Domain Holdings Australia Limited (ASX: DHG) has become the topic of discussion among buyers as they enter the final round of Nine’s regional news business auction.
The bid includes the sale of Nine’s Australian Community Media (ACM) business which runs a wide range of regional and community newspapers. Domain magazine inserts are parts of some of these newspapers largely distributed to major regional cities of Australia.
The real estate agents buy space for marketing in these mastheads for reach and then drive the traffic through the online property portal. The ACM sale, therefore, could potentially have an adverse impact on Domain’s reach, more specifically across the big cities like Melbourne and Sydney where the housing market is already going through a rough patch. It has been recorded that the annual residential property prices declined 7.8% in Sydney and 6.4% in Melbourne during the December quarter 2018.
The sale deal is expected to close by the end of this month as the cut-off date for the second round of offer is set to 24 April 2019, told the Australian media company.
Domain reported underlying revenue of $183.9 million, up 0.3%, and net profit after tax of $21.1 million down 14.2% for the half ended 31 December 2018. But on the statutory basis, the Group reported a net loss after tax of $156.4 million in 1 HFY19 including significant items after tax of $177.5 million
The bright side of the half-year results has been the substantial improvement in Domain’s Residential business. The increased sales of premium product drove the Residential revenue to 8.6% increase to stand at approximately $94 million. Domain’s commercial business segment also achieved a 20% growth in revenue underpinned by robust positions in the audience, listings and leads.
In December 2018, Domain acquired 100% interest in its competitor Commercialview.com.au Limited. The acquisition took place through Domain’s partially owned subsidiary Commercial Real Estate Media Limited for consideration of $8.2 million in newly issued CREM shares and $1.9 million in cash.
Going forward, Domain continues to invest in growth initiatives including marketing, product development and driving sales performance, balanced by the disciplined cost management. The company expects its Fiscal 2019 underlying costs, excluding investment in new Consumer Solutions businesses, to be slightly down against proforma Fiscal 2018. However, total costs are anticipated to improve mid-single digit against proforma Fiscal 2018, stated Domain.
In today’s trading session, DHG stock price declined by 3.462% to last trade at $2.690 on 2 April 2019. The market capitalisation of the company stands at $1.52 billion.
Over the past 12 months, the stock has witnessed a negative price change of 18.75% despite a decent uptrend of 17.12% recorded in the past three months.