I think it's a buy. I think that $3.36 will be the low. Recent share price falls are the result of 2 factors: 1. Adshel did they overpay? 260m new debt + 71 million new shares. Debt to EBITDA has gone from 1.3x to 2.5x and the company has stated previously that they are satisified at under 2x. 2. Macro factors? Retailers struggling, consumers constrained will it lead to the overall advertising spend reducing?
Recently when Adshel renewed the Brisbane city council contract the share price bounced but got sold off quickly but that was when the overall market was falling. More recently the share price bounced when JC Deaux revealed that they are not tendering for the City of Sydney contract that OML currently have which we can assume OML should retain. Whilst the market is selling off OML at the moment, I think OML is a buy because Adshel is great acquisition it complements OOh in many ways providing leverage to data and technology and also the fact that JC Deaux did not tender for a major contract shows that the 2 biggest industry competitors in Australia are not going to undercut each other and so margins should increase from here.
OML Price at posting:
$3.64 Sentiment: Buy Disclosure: Held
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