SWM - Seven West Media

System · 2 May 2011

Seven West Media Limited (SWM) was created through the acquisition of Seven Media Group by West Australian Newspapers Holdings Limited (WAN) as approved by WAN shareholders on 11 April 2011.

Seven West Media comprises Seven Television, the leading free to air capital city television network; Pacific Magazines, the country's second largest magazine group by readership; Yahoo!7 one of the nation’s most successful internet platforms, as well as Western Australia's leading newspaper, The West Australian and associated WA regional newspapers and radio stations.

http://www.sevenwestmedia.com.au

kreagh · 14 August 2011

Just wondering if anyone had any thoughts on this stock. It has an amazing dividend yield and has been a consistent financial performer over the years - yet the share price just keeps plummeting. Strange.

Is the debt the only issue that is scaring investors away?

robusta · 14 August 2011

kreagh said:
Just wondering if anyone had any thoughts on this stock. It has an amazing dividend yield and has been a consistent financial performer over the years - yet the share price just keeps plummeting. Strange.

Is the debt the only issue that is scaring investors away?

The debt certainly scared me away, and a poor outlook for traditional media IMO does not help either.
Mr Stokes seems to be very good at taking care of Mr Stokes but sometimes the small shareholders get squeezed IMO.

notting · 14 August 2011

Analysts and instos figure WAN paid too much and should have saught a better price. Every one is waiting to see how it performs. WAN was also held by many as a hi yielding earner. Stokes has made noise about change to growth culture and dividend is expected to be reduced to help fund new debt.
Hence ruptions.
Will burn when turns.
Stokes owns alot of it and his new mates all jumped in at around $5.80 not very long ago!
Print media is also having a bit of an identity crysis as we know.
It's either a great buy or billion air fry.

kreagh · 14 August 2011

notting said:
Analysts and instos figure WAN paid too much and should have saught a better price. Every one is waiting to see how it performs. WAN was also held by many as a hi yielding earner. Stokes has made noise about change to growth culture and dividend is expected to be reduced to help fund new debt.
Hence ruptions.
Will burn when turns.
Stokes owns alot of it and his new mates all jumped in at around $5.80 not very long ago!
Print media is also having a bit of an identity chrysis as we know.
It's either a great buy or billion air fry.

Thank you Robusta and Notting. I thought I might have been missing something more obvious than the debt and the prospects of print media.

I'm a bit new to investing, but just wondering if the Seven Group's holdings in mining and construction also has any impact?

McLovin · 14 August 2011

kreagh said:
I'm a bit new to investing, but just wondering if the Seven Group's holdings in mining and construction also has any impact?

I held WAN until it was pimped to Stokes. If you buy SWM you need to understand you're essentially buying into what Stokesy sees as his own private company with a few annoying minority shareholders. If I want to own a mining and construction company then I can and will do it, ditto media. Do I want the two together? No thanks.

notting · 15 August 2011

McLovin said:
I held WAN until it was pimped to Stokes. If you buy SWM you need to understand you're essentially buying into what Stokesy sees as his own private company with a few annoying minority shareholders. If I want to own a mining and construction company then I can and will do it, ditto media. Do I want the two together? No thanks.

I saw a beautiful picture in the paper of a bobcatvthingy. The comment, "I don't know what it is but it works!"
We'll see.

notting · 24 August 2011

Turned hard after first result as new conglomerate currently up over %15.
The billionaire might win after all!!
Analysts and fund managers may back it from here.

kreagh · 24 August 2011

notting said:
Turned hard after first result as new conglomerate currently up over %15.
The billionaire might win after all!!
Analysts and fund managers may back it from here.

I certainly hope so - I picked up as much as I could at about $2.60 a couple of days ago. The underwritten dividend for this period and the next was too attractive to miss out on.

Also, I think their debt is not a killer because their media businesses have great cashflow.

It has a huge ROE probably because of its debt, but net operating cashflow and interest coverage are high.

I hope I'm not missing something. I read a bit about earnings risk on this forum - but need to research how to assess that.

So far it looks like a good introduction to the stock markets for me.

McLovin · 24 August 2011

kreagh said:
I certainly hope so - I picked up as much as I could at about $2.60 a couple of days ago. The underwritten dividend for this period and the next was too attractive to miss out on.

Also, I think their debt is not a killer because their media businesses have great cashflow.

It has a huge ROE probably because of its debt, but net operating cashflow and interest coverage are high.

I hope I'm not missing something. I read a bit about earnings risk on this forum - but need to research how to assess that.

So far it looks like a good introduction to the stock markets for me.

Couple of things:

1) I'd never rely on a TV station to spin off cash. They have a tendency to need the cash to pay overpriced executives and on air talent. Seven is at the top of its game at the moment, but it's a revolving door and who knows where they will be in a few years, look at TEN. Aside from that $140m in OCF isn't stellar, especially with an interest bill of $40m and that's not 6 months worth of interest.

2) RoE is 4.5%, not great at all, especially with d/e at 82%.

Were you using the latest annual report?

RandR · 24 August 2011

kreagh said:
Also, I think their debt is not a killer because their media businesses have great cashflow.

It has a huge ROE probably because of its debt, but net operating cashflow and interest coverage are high.

I hope I'm not missing something. I read a bit about earnings risk on this forum - but need to research how to assess that.

I think your using data thats old, and was for WAN, not for SWM. As Mclovin has pointed out ROE for this year was 4.5%

kreagh · 25 August 2011

RandR said:
I think your using data thats old, and was for WAN, not for SWM. As Mclovin has pointed out ROE for this year was 4.5%

Yes you're both right! Whoops! Probably need to reassess.

Where did you guys get the figures for SWM as a merged entity?

notting · 25 August 2011

It has quite a hill to climd and I suspect it will !
Never net against a billiomair as they say.

kreagh · 25 August 2011

kreagh said:
Yes you're both right! Whoops! Probably need to reassess.

Where did you guys get the figures for SWM as a merged entity?

Sorry should clarify. Did you guys know that the ROE was that low before the latest announcement - and if so from where?

notting · 25 August 2011

One of the main negatives causing the pull down was the suspicion that the dividend would need to be cut as a merged entity. However it's performance has pleased and the dividend remains extremely high with full franking. Many probably jumped ship because of fears of it becomimg less of a dividend stock which is very negative in this environment.

I don't like debt but SWM has very strong cash flow. Billionairs tend to know what what best to do with money! Stokes is generally hard to understand as is SWM so every one includimg fumd managers have played it safe and got out to wait and see. Now they may all rush back in! As they did yesterda!

It has also managed to slightly increase News circulation which was suspected as dying and David Leckie indicated he wasn't as worried about advertising slump as he had been last quarter.
All good.
I have been buying it for a while now. One of my big'ns.

RandR · 25 August 2011

kreagh said:
Sorry should clarify. Did you guys know that the ROE was that low before the latest announcement - and if so from where?

The prospectus for the acquisition 6 months ago. The report yesterday just confirmed it. I havnt looked at the report for longer than a minute. But is be very surprised if there has been any real positive cashflow with a roe of just 4.5%. Have you looked at the statement of cash flows ?

McLovin · 25 August 2011

kreagh said:
Sorry should clarify. Did you guys know that the ROE was that low before the latest announcement - and if so from where?

Yes. Have a look at the absurd price WAN paid for SMG. If you didn't get the prospectus, it was spalshed across the business pages all through February/March/April. The retail take up of the offer was a flop largely because it was so overpriced.

notting said:
Never net against a billiomair as they say.

Never expect a billionaire to do anything for the benefit of anyone but themself. SWM is a case in point.

notting · 25 August 2011

McLovin said:
Never expect a billionaire to do anything for the benefit of anyone but themself. SWM is a case in point.

Doesn't that support the price given he owns so Much of it?

Also the Instos all jumped in at $5.80! Knowing full well the retail investors were going to be offered it at $5.20.
I kind of read that as 'We know the retailers won't take it up anyway. We'll produce the ace later.
Given it was such a so called high price the only thing that would justify that would have been that WAN was going bust!
Didn't seem to be yesterday. Possible?
Hope gone mad!
Shall see.

McLovin · 25 August 2011

notting said:
Doesn't that support the price given he owns so Much of it?

He owned Seven and they ended up buying a Caterpillar dealership. He owned a good slice of WAN and they ended up buying Seven.

He has the ability to shuffle the balance sheet when it's advantageous to him.

Like you say we shall see.

notting · 18 October 2011

Just refinanced 1.95B of dept.
Should be seen as extremely positive in light of the threat of not being able to refinance now off the cards.
Not the best day to announce it as the market has tanked after German Finance minister tried to cool expectations about the weekend so they can still impress the market that looked a bit too impressed already!!
Bounced about 3% from where it was regardless of the tanking day.

SWM - Seven West Media

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