Off comsec, I guess this sums it up:-
NeutralSeven West Media(SWM.AX)FY21 results: Higher cost outlook drive downgrades; TV market looking strong in 1H22; Neutral16 August 2021 | 10:59PM AESTSWM reported an in-line FY21 result, with sales/EBITDA/NPAT were +1%/-3%/+2% vs. GSe and in-line with the recently provided guidance. Cash conversion remained weak (GOCF = 64% of EBITDA), while gearing continued to improve (0.95x ND/EBITDA vs. 2.0x at 1H21).The key disappointment was the higher than expected FY22 cost guidance, with SWM expecting costs in the range A$1,175-95mn, well ahead of our prior $1,097mn estimate. The key difference differences vs. our prior expectations relate to: (1) c.$12mn of content production costs (associated with c.$15mn revenue); (2) $12mn higher than expected Olympic costs; (3) $10mn impact of accounting on cloud compute costs; and (4) net $30-40mn increase in underlying content costs.However, partly offsetting this was the stronger FY21 BVOD performance (Rev +66% in FY21), and stronger than expected 1H22 TV bookings trends, with 1Q/2Q22 bookings tracking +60%/low to mid-single digit (ex AFL), well ahead of GSe prior +13%. Given that SWM' target revenue share of 40% is below GSe prior 40.5%, this implies a stronger overall TV market in 1H22 than our +2% forecast (revised +6%) and hence upside risk to our NEC FY22 forecasts. When combined with the lower TV share form SWM in FY21 (35.3% vs. 37% prior) we believe NEC looks well-placed to deliver solid TV revenues in FY21/22 (noting TEN could also be out-performing). NEC reports its FY21 results on Aug 25th.Overall we revise SWM FY22-24 EBITDA -7% to -3% given higher costs, partly offset by improved revenues. However, given lower D&A and interest expense, our FY22-24 NPAT is +1% to +7%. Our 12m TP decreases -5% to A$0.52 in-line with earnings. We remain Neutral.SWM.AX Earnings and ValuationExhibit 1 : We revise SWM FY22-FY24 EPS by +1%/+7%/+7% on greater TV Revenues and lower D&A and Interest Expense, offset by increased costSource: Company data, Goldman Sachs Global Investment ResearchExhibit 2 : Our 12m EV/EBITDA-based SOTP TP for SWM decreases by 5.5% to A$0.52 driven by earningsSWM EV/EBITDA SOTPSource: Goldman Sachs Global Investment ResearchKey risks are: (1) better/worse than expected cost reduction; (2) strong/weaker outlook; and (3) stonger/weaker TV market share gains
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