Firstly lets be clear that the balance sheet of ASX:SWM is rock solid. At the current cyclical low earnings, it has a net debt/EBITDA ratio of 1.6x (or 1.3x when we exclude its listed ARN share investment). Bank Covenants on these types of media assets are generally set at 3.5x or higher (meaning earnings could halve again to $94m EBITDA and SWM would still be comfortably within banking covenants) . Bank facilities were refinanced in November 2023 for a term of 4 years at a rate of 2.4% above BBSY being approx. 6.8% (which will be likely lower again in February once the RBA cuts rates and is already an extremely good rate for a banking facility of this kind). It has $224m of headroom in its bank facilities and has been cashflow positive throughout the entire period of this ad market recession which has already lasted 2 years.
SWM Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)