Is it time to buy media?

Mediaset and Atresmedia: is it time to buy media?

Paolo Vasile, CEO of Mediaset Spain stated, regarding the presentation of results, that “after a lukewarm start to the year in investment decisions, especially when compared to the start of 2020 still without the impact of the pandemic, the television market and online has shown strong growth as of April ”.

In other words, during the first trimester, advertising revenues fell and the audiovisual conglomerate reduced its net profit by almost 25% to 36.7 million euros compared to the same period in 2020, a year that hit all sectors without precedent, including television.

The audiovisual advertising market decreased by 7.9% to 557.3 million euros, compared to 604.7 million in the first quarter of 2020.

Ebitda decreased 23.7% to 51.3 million while Free Cash Flow increased to 84.6 million compared to the previous 73.9 million.

According to Infoadex data, the audiovisual group obtained a 30.6% share in the audiovisual market and 42.0% in the national television market, ranking as the undisputed leader of the same.

In addition, from Mediaset they presage “a 2021 of important economic recovery for the Spanish audiovisual industry and for the country’s economy,” Vasile added.

In this sense, Mediaset’s Spanish subsidiary, with a market capitalization of 1,789 million euros, has appreciated more than 28% in the continuous market so far this year and its shares are already sold for more than five euros, ahead of Atresmedia (3.87 euros).

From Renta 4, they stand out as positive that the results exceed the consensus estimates in Ebitda by 7% due to a higher cost containment than expected (18% compared to their forecast and the consensus estimate of 12%), making the margin Ebitda yields less than expected.

María Mira, Investment Strategies analyst, highlights that “the last section of 2020 was very positive in terms of the recovery of the advertising business and the good purchases of assets made by the group, such as the German ProsiebenSat.1”.

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In addition, the conflict with Vivendi (originated in 2016) over the merger with its Italian parent company was terminated on May 3. Mediaset has promised to pay an extraordinary dividend of 0.30 euros per share in July, while guaranteeing Vivendi’s support for the pan-European strategy (Media For Europe) pursued by the group controlled by the family of former Italian Prime Minister Silvio. Berlusconi. The shareholders’ meeting will be held on June 23, but the French group has already announced that it will vote in favor of the initiative.

Among the advances in value, Mediaset stands out in the audiovisual panorama after going from the ‘consolidation’ to ‘bullish’ phase. Despite the falls experienced in the trading session on Tuesday, the company is revaluing more than 28% annually, as previously said. Barclays sees a potential of 18% in Mediaset after raising the target price on May 10 to 6.5 euros per share from the previous 6.25.

According to the technical indicators of Investment Strategies, Mediaset obtains a score of 8, with an upward trend in the medium and long term, positive momentum and growing volume in the medium term, although it resists it in the long term. Negative: volatility, measured in the range of amplitude, is increasing for the value.

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Premium Mediaset analysis

Regarding the results of Atresmedia, the radio and television company announced a net profit of 20.1 million euros until March, 7.55% less, but higher than the 19 million expected. Its Ebitda also beat estimates (28 million) and reached 34.6 million euros. Similarly, revenues exceeded forecasts by 5 million, up to 204 million euros in the first quarter of this 2021.

The results of the first quarter are “slightly above our estimates and those of consensus in income,” they explain from Renta 4. “The surprise comes from the Ebitda side due to greater savings than expected, operating expenses are moderated by 10 %, at 18 million euros (vs -6.7% R4e and -8.2% consensus) ”, they add from the entity.

Thus, after presenting its accounts, on April 30 UBS raised its target price to 4.20 euros from the previous 3.35 (potential 6%). JPMorgan did the same and raised the target price from 6.30 to 6.80 euros per share, giving it a potential of 75% over yesterday’s price.

Britain’s Barclays put the 4.10 euros on the table after an improvement from the previous 3.75 euros. However, The finishing touch to Atresmedia was put this week by Berenberg who, although he raises the target price to 3.75 euros, the potential granted by the entity represents a fall of 3%.

Atresmedia, with a market capitalization of almost 881 million euros, only surpasses Mediaset in annual revaluation and rises more than 37% on the stock market. Regarding the Investment Strategies premium indicators, the technical situation for Atresmedia is the same as for Mediaset: 8 points, with an upward trend, positive momentum and growing volume in the medium term. It faces volatility and the volume of hiring is decreasing in the long term.

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Atresmedia premium analysis

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