Cheap with Growth - 6.3x Multiple

First post ...

Here are my calculations for what is a business that in my view is not well understood by the market.

What do others think ?

QMS as we know has QMS Sport, QMS NZ and Media Works. QMS Media (62% of QMS revenue) as we know offers Out of Home ("OOH") advertising solutions focused on digital signboards (79% of revenue), where it will have i guess 135 sites by now.

Of a typical Corporate's Advertising Budget, OOH advertising represents c6% of the total budget and has grown +8.8% p.a since 2009 compared to +4.3% for the Advertising sector. Since 2015, all growth in OOH has been digital signboards, as customers switch away from static (today over 52% of the OOH market (consolidated, now only 3 players) is digital, compared to 5% in 2012).

QMS NZ (26% of QMS revenue), through its MediaWorks JV is the #1 radio network and #2 TV network in NZ, with earnings to potentially come from 1 July 2019. We should also be getting back a $35m debt payment - we wait anytime for that.

QMS Sport (12% of QMS revenue) in my view is a monopoly business operating in over 1,800 global sporting grounds in 50 countries, through digital on ground advertising with earnings to kick from 1 July 2019. The QMS sports business has the ability to monetise its assets by new technology that delivers sub geographic advertising i.e. live sport, will have different ads for those in London to those in Sydney. I do not think the market understands this segment well at all.

QMS is trading at a significant discount than Global peers (JCDecaux, Lamar Advertising, Outfront, ClearChannel) who are 10.1x EV/EBITDA, compared to 6.3x for QMS in FY19.

The good thing as well is the CEO owns 15% of the company, skin in the game is always important in my mind.

It is also the cheapest on P/E of global peers. Way cheaper.



Has a solid potential dividend path based on its guided payout ratio.




Net Debt should fall as it has built up its market share through acquisitions. Now its about conversion.



Has high potential returns on capital



P/E multiples just get better over time, if delivers only 6% revenue growth.

Keep in mind Out of Home market (digital) has been growing double digit.




Welcome thoughts.

I of course own it.