ASX:SWM
Seven West Media Ltd
Investment Summary
The fund managers believe that Seven West Media Ltd is currently undervalued, trading at approximately 3x earnings and a PE ratio of less than 4x. They highlight that the Board's 42% ownership indicates their confidence in the company, choosing to buy back shares instead of pursuing riskier acquisitions. In their opinion, the low share price reflects discomfort in the advertising market and a lack of dividends. However, they believe improvements in the advertising market and a new operational structure focusing on three divisions—Television, Digital, and Western Australia—will drive growth. They anticipate that prioritizing Digital as a growth driver could facilitate a turnaround. The fund managers see potential for the Board to reinstate dividends, which could lead to substantial appreciation in share price.
Commentary From The Managers
Collins St Asset Management
31 Dec 2024
$0.15
- Seven West Media (SWM) has been trading at extremely low multiples, currently at a PE of less than 4x.
- The low trading multiples are attributed to discomfort in the advertising market and the absence of a dividend.
- Collins St Asset Management believes the advertising market will improve from its current cyclical low.
- SWM is positioning for a turnaround through a group-wide restructure of operations and management.
- Recently announced a new operating structure with three divisions: Television, Digital, and Western Australia, prioritizing Digital for future earnings.
- There is potential for the Board to reinstate a dividend, which could materially increase the share price.
Collins St Asset Management
31 Mar 2024
$0.19
- Seven West Media is currently owned 42% collectively by the Board.
- Trading at 3x earnings, indicating strong value.
- The Board has determined that investing in themselves is the best use of capital at this time.
- Share buybacks are seen as cheaper and more accretive than other acquisition options.
- Buying back shares is considered less risky than potential acquisitions.
- Collins St Asset Management continues to hold based on these strategic decisions.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.