Analyst view

TMS
16 Sep 2002 Code Last +/- % TMS 8.9 +1 +12.7%


Friday, 20 September 2002 AEST


Television & Media (TMS.AX) Reduce
Advertising Australia

Price@13/09/2002: A$0.17

12 month range: A$0.76 - 0.17

Valuation: A$0.15

Price Target: A$0.15 (-12%)

Market Cap: A$24.5m/US$13.4m

Shares on Issue: 143.9m

Average Volume (000's): 438



In serious financial difficulties.


Television & Media Services reported a loss of $75.9m for the year ended 30 June 2002 including $67.5m in write-offs.


Pre-abnormals, the company recorded a loss of $12.9m which was worse than our forecast of $9.2m with all segments disappointing relative to our expectations.


The ongoing solvency of the company, in our view, remains under threat as the company works to restructure its arrangements with the cinema operators.

Event


Company reports full year result.

Impact


We do not envisage Val Morgan being profitable in the current year, given the structure of its theatre rental arrangements and the state of cinema advertising in general.


In our view the ongoing solvency of the company is under doubt, and we believe the company will struggle to service net debt of c$59.2m ($79.7m as of 30 June less the receipt of $19.5m from the sale and leaseback of North Ryde in July).


At this stage, we would regard our revised forecasts as being largely academic, whilst the company works on restructuring its arrangements with the cinema operators. Should this not be achieved, we believe the ongoing financial viability of the company is under threat. Valuation and Rating


Our rating has been revised from Hold to Reduce.
In our view, there is too much financial risk associated with an investment in Television & Media Services at this point in time.

Our assessed valuation and price target of $0.25 values the company at a 40% discount to the broader market averaging across FY03E and FY04E.
We believe it prudent to incorporate a discount given the sharp recovery built in for Val Morgan’s earnings. Key investment risks, in addition to the discussion above, include a continued delay in a cinema advertising recovery and the translation impact of the company’s foreign sourced income.
______________________________________________

Hello Grant I would imagine that in time you may read this post ,
I have been following your excellent articles on TMS and thank you for them
Could please offer your opinion as to why

P. B.L Press Holdings LTD increased its shareholdings in TMS recently

Was it to average down its original entry price knowing that it will recover,

Or-----To slowly increase its S/H with a view to a full takeover

Or-----Have a bigger say at a possible receivers meetings with an eye to some cheap pickings