ASX:SWM
Seven West Media Ltd
Investment Summary
The fund managers believe Seven West Media Ltd (SWM) is undervalued, with the company currently trading at exceptionally low multiples, around 3x earnings. They attribute this undervaluation to two main factors: concerns over the advertising market and the absence of a dividend. However, they are optimistic that the advertising market will improve from its cyclical low, and that SWM’s restructuring efforts—particularly its focus on Digital as a key earnings driver—will enhance future performance. The fund managers also believe that reinstating a dividend could significantly boost the share price. Additionally, with the Board owning 42% of the company, the managers view the recent share buyback program as a prudent move, offering an attractive and low-risk investment relative to other acquisition opportunities.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Manager
Collins St Asset Management
Date
31 Mar 2024
Price
$0.19
Medium
Quarterly Report
Commentary
Collins St Value Fund continues to hold its investment in Seven West Media Ltd, updating its investment thesis in light of recent company decisions. With the Board collectively owning 42% of the company and the stock trading at just three times earnings, the Board has determined that the most compelling investment opportunity available is in the company itself. Rather than pursuing external acquisitions, Seven West Media has prioritized share buybacks, a strategy the Fund notes is not only financially attractive but also lower risk. Collins St Value Fund recognizes that this approach reflects the Board’s confidence in the company’s valuation and future prospects.
Collins St Asset Management
Date
31 Dec 2024
Price
$0.15
Medium
Quarterly Report
Commentary
Collins St Value Fund continues to hold its position in Seven West Media Ltd, updating its investment thesis to reflect the company’s current valuation and strategic initiatives. Seven West Media has been trading at historically low multiples, with a price-to-earnings ratio of less than 4x. Collins St Value Fund believes this undervaluation is primarily due to concerns over the advertising market and the absence of a dividend. However, the fund expects advertising conditions to improve from current cyclical lows and sees Seven West Media as well-positioned for a turnaround through its recently announced operational restructure. The new structure, which prioritizes Digital as a key driver of future earnings alongside Television and Western Australia divisions, is viewed as a significant step toward long-term growth. Additionally, Collins St Value Fund notes that the potential reinstatement of a dividend could serve as a catalyst for share price appreciation.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.