APO (ASX) - BUY ~ 4.65 - SOLD @ 4.71

12 Jul 2017

 

 

 

Company Profile 

 

  • APN Outdoor Group Ltd (ASX: APO) is one of the biggest outdoor advertisers in Australia with its large number of advertising boards.

  • APN Outdoor Group Ltd is a outdoor advertising operators, with a portfolio of premium, high-traffic sites across a number of categories, including large format static and digital billboards transit networks, rails and in airports

 

General Thoughts

  • The total advertising spend across Australia is increasing, but spending on TV advertising and physical newspapers is decreasing. This gives the other advertising formats a great platform to keep increasing revenue.

  • Outdoor advertising in all its formats has one huge advantage over even the best of Internet ads – they are always there. You can’t click through to the next page and the only adblocker is your ability to look away

  • The good thing about advertising is that it doesn’t rely on one business or any particular section of the public.

  • APN Outdoor can attract advertising dollars from overseas businesses who are marketing their product or service, APN isn’t reliant on just Australian businesses spending their dollars.

  • APN Outdoor is the most broadly diversified, with an advertising presence in transit, rail, and airport in addition to its billboard advertising.

  • 79.43% institutional ownership. Hedge funds, considered active investors, hold a 21.62% stake in the company, which may be the cause of high short-term volatility in the stock price

 

  • More shares have been BOUGHT than Sold by INSIDERS in the past 3 months

 

  • (Montgomery Investment Management) There are a number of reasons why the outdoor advertising industry should grow its share of the overall advertising pie over the next five to ten years 

    • Fragmentation of the audience in traditional forms of media  

    • The roll out of digital screens

    • Improved audience measurement and data

    • It appears that growth supply in the short term is significantly outstripping demand growth, presenting the risk that earnings expectations as a result of weakening margins.

 

NEGATIVE THINGS

  • Australia’s Outdoor Media Association (OMA) reported 15.7% growth in out of home advertising in 2016 but noted a slowing in the rate of increase, a trend not yet reversed in the first two quarters of 2017.

  • While flashy outdoor advertising is generating the excitement, investors need to remember both companies are diversified advertisers, with a presence in “classic” and online advertising as well as in digital.

  • While the digital outdoor advertising sector seems a good long term bet, a Bear argument against investing would point to the dangers of falling advertising revenue in a recession. While economists and marketing experts argue against cutting back on ad spending in tough times, companies do it

 

 

Entry Price: $4.82 

 

Brokerage cost: $19.95

 

Position Size

  • Risk = 1%

  • ATR Multiple = 2

  • Recommended Quantity = 1,200 shares

  • Initial Buy = 250 shares @ $4.82

    • Average Down #1 = 750 shares @ $4.54

 

Exit: SOLD early in order to move capital to A2M (16 Aug 2017)  

 

Target Price: $8.00 (+1year)

 

Reasons to Buy

 

Reports

 

Switzer Report: Outdoor advertising | 15 December 2016

 

 

News

  • APN Outdoor had renewed its Tullarmarine Freeway contract, following a competitive pitch by Australian outdoor media companies.The Tullarmarine Freeway is one of Australia’s busiest freeways, and is the gateway from Melbourne CBD to Melbourne airport.

Fundamentals

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technicals

  • EPS = 0.29

  • RoE = 18.73

  • ROIC = 12.98

  • ROA = 11.53

  • Current ratio = 1.90 (>1.50)

  • Piotroski F-Score = 8 (9 = high value stock ; 1 = low value stock)

  • ADX(14) = 20.96 (0-25 = weak trend;  25-50 = strong trend); 50-75 = strong trend; 75-100 = extremely strong trend)

  • MA(200) = 5.33

  • MA(50) = 4.91

 

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  • Motley Fool talked about APO since @ $5.46

  • The VC1 = 38 (0 is undervalued - 100 is overvalued (VC1 is calculated using the price to book value, price to sales, EBITDA to EV, Price to cash flow, and price to earnings)

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  • APO is held by Clime Capital Limited (ASX: CAM)

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  • “Sell everything” is “fake news”… APN Outdoor is good value - https://switzersuperreport.com.au/sell-everything-is-fake-news-apn-outdoor-is-good-value/

  • morgans.com.au – double blessed buy - In our last update on May 5, 2017 we discussed that the stock is under selling pressure and the likelihood of the price declining to $5.00 in the short term. A strong pull back has unfolded over the past month and our downside price target has been exceeded. The price appears to have bottomed at $4.50 last week which is close to key support of $4.35. The MACD indicator has reached oversold territory, suggesting that the price is likely to bounce in the near term. Given the proximity to key support and oversold momentum levels we are comfortable buying at current price levels.The first potential upside price target is $5.20 however levels towards $5.50 appear easily achievable.

  • earlebusinessunion.com (Jul 3rd) - Presently,

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