Firstly I would like to say thank you to the wonderful people...

Firstly I would like to say thank you to the wonderful people who have posted here. I have always appreciated the insight and wisdom that has been passed around. (Notably people such as Transversal https://hotcopper.com.au/search/search?type=post&users=Transversal, Red Dirt Dan https://hotcopper.com.au/search/search?type=post&users=Red+Dirt+Dan, Amused Observer https://hotcopper.com.au/search/search?type=post&users=Amused+observer 1357.al.toh https://hotcopper.com.au/search/search?type=post&users=1357.al.toh and Mode1971 https://hotcopper.com.au/search/search?type=post&users=mode1971)

I figured that I might as well put forth some of the factual information and analysis that has made investing in SWM such a compelling, no brainer decision. Right now you can buy a company that is worth at least $1.50 for a current market price of 24.5 cents.(I will get to the valuation metrics in a later post)

I apologise in advance for my longwinded posts, as I will be setting out a number of pertinent facts that I think are not well understood by the market about SWM.By all means please set my account to ignore if this annoys you as I do not wish to upset any of the wonderful, good natured people on this forum. Undoubtably the figures and valuations will be inprecise (factually I don't really mind if I am paying 26 cents instead of 25 cents for an asset worth $1.50, I just care a great deal that I am right about the asset actually being worth $1.50)

Now lets take a look at how this ''Up and Down ??'' thread started some 5200 posts and 3+ years ago. Covid-19 pandemic hit and the stock price was sold down to less than 10 cents per share largely due to solvency concerns brought about by the highly leveraged balance sheet which amplified the negative effects of the Covid-19 induced ad market recession (SWM had an enterprise value at the time of approx $700m which included $541.5m of net debtas of 1H20 results with a 2.4X Net debt/ EBITDA. This Net debt/EBITDA ratio got substantially worse during the second half of FY20 and required renegotiation of the bank loans which were in place at the time).

As stated by RuntheBulls69 ''I’m an optimist BUT this is 2020 and there’s not much good news about. That said , you could argue the bad news has been factored in at 10cents.The stock price has flat lined with everyone waiting to hear how the companies looking im guessing... it’s the debt that scares everyone so the announcement of a sale to wipe off some of that will be so well received. I personally think they are doing well managing debt. ''

Right now at a 24.5 cent share price SWM has an enterprise value of approx $642m (which includes $265m of net debt after the $67m asx:A1N 19.9% acquisition cost and approx $51m of net cashflow during FY24 the majority of which has already been banked during the first half)

Despite its current debt being within the low 1.0-1.5x net debt/EBITDA target band SWM has been sold down to an unbelievably undervalued price.Management has even gone to the effort of explicitly reiterating the strength of SWM's current balance sheet during the ASX announcement of 13 November 2023 concerning the asx:A1N share acquisition https://clients3.weblink.com.au/pdf/SWM/02738746.pdf
''The share purchase and swap pre-funding will lift SWM’s pro-forma FY23 leverage from 0.9x (netdebt / EBITDA) to approximately 1.15x. To the extent current advertising market conditions result inSWM leverage being above the target 1.0-1.5x band at the end of December 2023, the recentlyannounced $60 million in cost initiatives would be expected to bring leverage back within the targetrange within a short period of time.''


So basically right now you can buy Seven West Media on market at cheaper prices than during the Covid-19 lows despite the business and its balance sheet having been completely transformed over the last 4 years (I will post next about the massive transformation that the earnings and operations of the business have undertaken and about what will likely happen in the next 18 months that the market has not yet figured out.) (continued...)