Morningstar has increased its FY21 and FY22 Ebit estimates on Seven West Media by an average of 80 per cent following the media group’s 1H results.
The Kerry Stokes-controlled group reported on Monday that it had returned to a statutory net profit of $116.4m in 1H21 from a net loss of $49.4m and cut its net debt by $68m to $329m.
“The better than expected progress in balance sheet repair has vaporised our key concern regarding the group’s financial position,” media analyst Brian Han says in a research note.
Han also removes his previous 50 per cent probability assumption of zero value in Seven’s equity and reverts his fair value estimate to an intrinsic basis.
“Our fair value uncertainty rating has been cut to high, from extreme,” he said.
Morningstar’s standalone fair value estimate has been raised to 43c a share from 20c, “mainly reflecting the stellar cost-out efforts’’.
Below is a quote from me on these threads on 7 in just December, which really was not long ago!!
"Some senior analyst from Morningstar... a fellow called Brian Han quoted in Oz today!
50% chance of zero equity value he reckons- where do they get some of these people from?
In my opinion and I'm not a senior analyst but am a senior experienced investor , the odds of 0 equity value are less than 10%!! "
SWM Price at posting:
56.0¢ Sentiment: Hold Disclosure: Held
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