Fund Manager Summary
The fund managers believe that the outlook for NZME Ltd is promising, particularly following the RBNZ's recent interest rate cut, which has positively impacted investor sentiment. In their opinion, NZME's ongoing digital transformation is yielding significant results, with digital audio revenue and digital subscription revenue growing by 33% and 13% respectively in 1HCY24. Notably, the 63% growth in OneRoof’s digital listing revenue highlights its potential, as it narrows the audience gap with the leading property platform to just 10%. The fund managers contend that the market undervalues NZME, trading at approximately 4x FY25 EV/EBITA, despite its substantial shift towards digital, which now represents about 30% of revenue. They anticipate further earnings improvement as the economy recovers and OneRoof continues to expand.
Source: Trading View
Commentary From The Managers
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Spheria Asset Management
30 Sept 2024
$1.00
Summary
- NZME (NZM.ASX) share price rose 13% during the month, indicating growing market enthusiasm for NZ companies following the RBNZ’s interest rate cut.
- Continues to deliver on its digital transformation strategy with significant growth in digital audio revenue (33%) and digital subscription revenue (13%) in 1HCY24.
- OneRoof’s digital listing revenue grew by 63%, with a +70% increase in OneRoof listing upgrades contributing to positive earnings.
- The audience gap between OneRoof and the leading property platform has narrowed to just 10%, highlighting OneRoof's continued market share gain.
- The market may be undervaluing NZME, seen as an out-of-favor traditional media company amidst its successful transformation from print to digital (currently ~30% of revenue).
- NZME trades at approximately 4x FY25 EV/EBITA, with potential for improving earnings as the economy recovers.
- OneRoof is expected to experience structural growth, enhancing overall company prospects as the transition to digital continues.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Spheria Asset Management
30 Sept 2024
$1.00
- NZME (NZM.ASX) share price rose 13% during the month, indicating growing market enthusiasm for NZ companies following the RBNZ’s interest rate cut.
- Continues to deliver on its digital transformation strategy with significant growth in digital audio revenue (33%) and digital subscription revenue (13%) in 1HCY24.
- OneRoof’s digital listing revenue grew by 63%, with a +70% increase in OneRoof listing upgrades contributing to positive earnings.
- The audience gap between OneRoof and the leading property platform has narrowed to just 10%, highlighting OneRoof's continued market share gain.
- The market may be undervaluing NZME, seen as an out-of-favor traditional media company amidst its successful transformation from print to digital (currently ~30% of revenue).
- NZME trades at approximately 4x FY25 EV/EBITA, with potential for improving earnings as the economy recovers.
- OneRoof is expected to experience structural growth, enhancing overall company prospects as the transition to digital continues.
Summary
Spheria Asset Management
30 June 2024
$0.89
- Spheria Asset Management notes that NZME (NZM.ASX) share price rose 8% in June despite no new company-specific news.
- The business delivered full year results in February with revenue down 5% due to a challenging advertising market.
- The rate of decline in revenue decelerated in 2H vs 1H (-3.7% vs -6.3% relative to the prior period).
- NZME achieved radio market share growth to 43.1%, the highest since measurements began in 2016.
- OneRoof, the 2nd largest property portal in New Zealand, generated profit for the first time in Q4 with revenue up 80% for the first two months of the new year.
- Cost growth was constrained to 3% as management remains aware of the tougher macro environment.
- While the short-term macro environment remains challenging, Spheria Asset Management believes there is tremendous long-term value in owning the leading radio and print business in New Zealand and the 2nd largest property portal.
- NZME is currently trading on 5x CY24 EV/EBIT.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"With a 13% share price surge, it appears NZME is redefining its narrative, transforming from a traditional media player to a digital contender. As OneRoof closes the gap in the property market, undervaluation seems inevitable amidst this evolving landscape."
Last Updated: 30 Sept 2024
Query The Data
Frequently Asked Questions
Who is investing in NZME Ltd (ASX:NZM)?
Fund managers including Spheria Asset Management have invested in NZME Ltd (ASX:NZM).
Why do fund managers invest in NZME Ltd?
Fund managers are investing in NZME Ltd due to its strong digital transformation, evidenced by significant growth in digital audio and subscription revenues. The company's OneRoof platform has shown exceptional performance, with a notable increase in digital listing revenue and audience share. Despite being perceived as a traditional media company, NZME's transition to digital, which now constitutes about 30% of its revenue, positions it well for future growth. Additionally, its low valuation at approximately 4x FY25 EV/EBITA suggests potential for earnings improvement as the economy recovers.
What happened to NZME Ltd (ASX:NZM)?
There have been no recent updates from fund managers regarding NZME Ltd although fund managers including Spheria Asset Management have previously commented.