Media

The media companies all tabled updates at the Macquarie conference.

NEC (Nine Entertainment) pointed to a weakening TV ad market, but noted that they were growing share, such that Total TV revenues were only down “very low single digit”.

SWM (Seven West Media) likewise pointed to a weakening market “down c11%”, and pointed to share gains of their own, but were much less explicit than NEC, which, in our view, means SWM had the weaker relative outcome.

OML (the outdoors advertising company Out of Home Media) had the worst of it, with more notable dire commentary.

What is the point?

Well, NEC strikes us as interesting, because it is a) performing better b) has a strong balance sheet and buyback c) owns Domain, which is also struggling, but a wonderful company long run, and d) trades very cheaply.

So we think that is a good (but very risky!) trade, although we don’t own it in our flagship funds.

However, the industry wide commentary is suggestive enough – don’t buy domestic cyclicals, there is a real downturn out there.

Advertising gets hit first.

We can see some of the consumer discretionary stocks posting slower and slower sales (today, SuperCheap, but even JBH’s, the best of the bunch by a long shot, confirms a similar point). We can see the general commentary about downshifting to lower priced better value items across the consumer basket.

We know the RBA just hit mortgage holders again.

And so, we own a bit less Australian shares, than normal, have positioned the equity sleeves a bit more defensively (well, AMC or RHC both downgraded, which is very frustrating, given we own them for expressly that purpose) and continue to see value in Australian Government Bonds at current yields (~3.33% for 10s) for the defensive contributions.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Receive our investment insights

Something went wrong. Please check your entries and try again.