APN Outdoor Group Limited (APO); Fairfax Media Limited (FXJ); HT&E Limited (HT1); Southern Cross Media Group Limited (SXL):
While many investors shun media companies as an investment proposition, potentially imminent legislative reforms could spark a consolidation of the media sector and create investment opportunities. Traditional media business models, particularly free-to-air television and publishing, have struggled in recent years as the internet has diverted eyeballs and advertising dollars to new online platforms Stocks that offer good value and would be well-positioned to benefit from proposed legislative reforms include: HT&E (formerly APN News & Media), radio station operators including KiiS FM, and Southern Cross Media Group , which owns radio station Triple M. With out-of-home advertising growing as a share of the total advertising market, another stock we like is outdoor media company APN Outdoor Group. Similarly, Fairfax Media, publisher of The Australian Financial Review , could benefit under the proposed new legislative regime. With some desirable assets, particularly its lucrative Domain business, as well as stakes in radio network Macquarie Media and streaming service Stan, we believe the company offers a strategic investment opportunity.
CIMIC Group Limited (CIM):
CIMIC has warned that arbitration over a $1.1 billion dispute with Chevron for work completed on Western Australia’s Gorgon LNG jetty will not start until 2019 after reporting a 22 per cent increase in interim net profit to $322.9 million. The construction group said in its interim results it is owed $2.6 billion from customers, including $1.15 billion from US energy group Chevron for work done on the jetty between 2009 and 2014 before it was acquired by Spain’s ACS. CIMIC and Chevron have been in dispute over who is liable for cost blowouts on the project, and have been in arbitration since 2016. CIMIC said arbitrators have been appointed and hearings would be held in 2019. It is also suing Chevron and engineering group KBR, the jetty’s project manager, in the US. The company said the legal action would have no effect on its entitlement to how much money it claimed in arbitration.
Downer EDI Limited (DOW); Spotless Group Holdings Limited (SPO):
Spotless has capitulated to Downer EDI, with its board recommending that shareholders accept the contractor’s $1.2 billion hostile takeover. The board’s change of heart came after Downer’s stake in Spotless rose to 67.3 per cent. The board changed its recommendation to ‘‘accept’’ from ‘‘reject’’ following a meeting on Monday. ‘‘The Spotless directors have carefully considered its previous recommendation to shareholders in the context of the changed circumstances facing Spotless, particularly the change in board composition and the current shareholding that Downer holds,’’ Spotless said on Tuesday. ‘‘Given this change in circumstances, the Spotless directors believe it is now more difficult to form a view that Spotless will deliver greater value to shareholders over the medium term and, on balance, unanimously recommend that shareholders accept the Downer offer.’’
Oil Search Limited (OSH):
Oil Search and its partners ExxonMobil and French giant Total are pushing to have their new plan for the expansion of LNG production in Papua New Guinea ready for October, when the new PNG government should be in place. Oil Search said on Tuesday that Exxon, which operates the PNG LNG project and the P’nyang field, and Total, which operates the Elk-Antelope project, examined ‘‘various development concepts for the Elk-Antelope and P’nyang gas fields’’ during the June quarter, where Oil Search’s production slipped slightly due to programmed maintenance that shut down its two production facilities for 17 days. ‘‘Oil Search believes the most likely development is based on the construction of two LNG expansion trains at the PNG LNG Project plant site, thereby utilising existing downstream infrastructure, using the existing gas resources in the ElkAntelope and P’nyang fields,’’ Oil Search chief executive Peter Botten said.
Rio Tinto Limited (RIO): Analysts have brushed off a rare dip in Rio Tinto’s iron ore exports and anticipate that strong prices for the commodity will deliver bumper first-half profits and dividends next month. Some analysts believe Rio’s 2017 dividend is on track to be the largest in the company’s history, despite last year’s change of dividend policy. The miner lowered expectations for its 2017 iron ore exports yesterday after first-half shipments fell short of market expectations. Rio Tinto shareholders have been urged to brush off a rare dip in the company’s iron ore exports, as analysts predict strong prices for the commodity will deliver bumper first-half profits and dividends next month. Some analysts believe Rio’s 2017 dividend is on track to be the largest in the company’s history, due to the strength of the price of iron ore.
Saracen Mineral Holdings Limited (SAR):
Kerry Stokes-backed Saracen Mineral Holdings has finally achieved its longheld ambition to produce gold at a rate of 300,000 ounces a year, a milestone which marks an ‘‘inflection point’’ for the mid-tier gold producer, managing director Raleigh Finlayson says. Shares in the Perth-based gold miner rose 9.5¢ or 8.2 per cent to $1.25 on Tuesday after it revealed it had achieved the 300,000 ounce production run rate, set for the June quarter of 2017, almost two years ago in October 2015. The milestone positions it as about the eighth-largest ASX gold producer by production. Saracen also increased its cash balance by $14.6 million during the three months to June 30, offsetting a $13.3 million decline in the previous quarter. Managing director Raleigh Finlayson said the result demonstrated Saracen had ‘‘reached the inflection point in our operations where previously cash-consuming assets have now become cash generating’’.
(Source: AIMS)
While many investors shun media companies as an investment proposition, potentially imminent legislative reforms could spark a consolidation of the media sector and create investment opportunities. Traditional media business models, particularly free-to-air television and publishing, have struggled in recent years as the internet has diverted eyeballs and advertising dollars to new online platforms Stocks that offer good value and would be well-positioned to benefit from proposed legislative reforms include: HT&E (formerly APN News & Media), radio station operators including KiiS FM, and Southern Cross Media Group , which owns radio station Triple M. With out-of-home advertising growing as a share of the total advertising market, another stock we like is outdoor media company APN Outdoor Group. Similarly, Fairfax Media, publisher of The Australian Financial Review , could benefit under the proposed new legislative regime. With some desirable assets, particularly its lucrative Domain business, as well as stakes in radio network Macquarie Media and streaming service Stan, we believe the company offers a strategic investment opportunity.
CIMIC Group Limited (CIM):
CIMIC has warned that arbitration over a $1.1 billion dispute with Chevron for work completed on Western Australia’s Gorgon LNG jetty will not start until 2019 after reporting a 22 per cent increase in interim net profit to $322.9 million. The construction group said in its interim results it is owed $2.6 billion from customers, including $1.15 billion from US energy group Chevron for work done on the jetty between 2009 and 2014 before it was acquired by Spain’s ACS. CIMIC and Chevron have been in dispute over who is liable for cost blowouts on the project, and have been in arbitration since 2016. CIMIC said arbitrators have been appointed and hearings would be held in 2019. It is also suing Chevron and engineering group KBR, the jetty’s project manager, in the US. The company said the legal action would have no effect on its entitlement to how much money it claimed in arbitration.
Downer EDI Limited (DOW); Spotless Group Holdings Limited (SPO):
Spotless has capitulated to Downer EDI, with its board recommending that shareholders accept the contractor’s $1.2 billion hostile takeover. The board’s change of heart came after Downer’s stake in Spotless rose to 67.3 per cent. The board changed its recommendation to ‘‘accept’’ from ‘‘reject’’ following a meeting on Monday. ‘‘The Spotless directors have carefully considered its previous recommendation to shareholders in the context of the changed circumstances facing Spotless, particularly the change in board composition and the current shareholding that Downer holds,’’ Spotless said on Tuesday. ‘‘Given this change in circumstances, the Spotless directors believe it is now more difficult to form a view that Spotless will deliver greater value to shareholders over the medium term and, on balance, unanimously recommend that shareholders accept the Downer offer.’’
Oil Search Limited (OSH):
Oil Search and its partners ExxonMobil and French giant Total are pushing to have their new plan for the expansion of LNG production in Papua New Guinea ready for October, when the new PNG government should be in place. Oil Search said on Tuesday that Exxon, which operates the PNG LNG project and the P’nyang field, and Total, which operates the Elk-Antelope project, examined ‘‘various development concepts for the Elk-Antelope and P’nyang gas fields’’ during the June quarter, where Oil Search’s production slipped slightly due to programmed maintenance that shut down its two production facilities for 17 days. ‘‘Oil Search believes the most likely development is based on the construction of two LNG expansion trains at the PNG LNG Project plant site, thereby utilising existing downstream infrastructure, using the existing gas resources in the ElkAntelope and P’nyang fields,’’ Oil Search chief executive Peter Botten said.
Rio Tinto Limited (RIO): Analysts have brushed off a rare dip in Rio Tinto’s iron ore exports and anticipate that strong prices for the commodity will deliver bumper first-half profits and dividends next month. Some analysts believe Rio’s 2017 dividend is on track to be the largest in the company’s history, despite last year’s change of dividend policy. The miner lowered expectations for its 2017 iron ore exports yesterday after first-half shipments fell short of market expectations. Rio Tinto shareholders have been urged to brush off a rare dip in the company’s iron ore exports, as analysts predict strong prices for the commodity will deliver bumper first-half profits and dividends next month. Some analysts believe Rio’s 2017 dividend is on track to be the largest in the company’s history, due to the strength of the price of iron ore.
Saracen Mineral Holdings Limited (SAR):
Kerry Stokes-backed Saracen Mineral Holdings has finally achieved its longheld ambition to produce gold at a rate of 300,000 ounces a year, a milestone which marks an ‘‘inflection point’’ for the mid-tier gold producer, managing director Raleigh Finlayson says. Shares in the Perth-based gold miner rose 9.5¢ or 8.2 per cent to $1.25 on Tuesday after it revealed it had achieved the 300,000 ounce production run rate, set for the June quarter of 2017, almost two years ago in October 2015. The milestone positions it as about the eighth-largest ASX gold producer by production. Saracen also increased its cash balance by $14.6 million during the three months to June 30, offsetting a $13.3 million decline in the previous quarter. Managing director Raleigh Finlayson said the result demonstrated Saracen had ‘‘reached the inflection point in our operations where previously cash-consuming assets have now become cash generating’’.
(Source: AIMS)
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