APN bang on with asset float timing says analyst
A FUND manager says APN News & Media may have picked an opportune time to float its Kiwi assets, which include the New Zealand Herald, Newstalk ZB and daily deal website GrabOne.
The Sydney-based company announced on Monday that it was considering a possible initial public offering of the assets through an NZX listing.
A trade sale is another, less likely possibility.
Paul Glass, principal at Auckland's Devon Funds Management, said many media companies' share prices had rebounded from their lows and investor appetite for such stocks had improved.
"What you had 18 months ago was a bit of a view in the market that a lot of the [media] businesses were terminal," he said. "Gradually, over this last period, you've seen stocks re-rate both on the recovery in the underlying economies but also the view that cashflows are going to be sustainable for a longer period of time."
In Australia, APN Australian Regional Media produces 12 daily newspapers and more than 30 news websites across regional Queensland and New South Wales.
APN's dual-listed shares, closed down 2c yesterday at 83c on the NZX at up A3c at A77c on the ASX.
Shares in rival publisher Fairfax Media, whose New Zealand mastheads include the Dominion Post and Sunday Star-Times, have gained almost 40 per cent this year and closed at A87c on the ASX last night.
Investors would find APN's New Zealand radio assets appealing, although question marks remained over the print businesses, Glass said.
Milford Asset Management executive director Brian Gaynor welcomed the potential listing but said the IPO would have to be reasonably priced and the market would seek more clarity on the Herald's plans to introduce a paywall for online content.
"I'm delighted with it [the possible IPO] but there's a lot of challenges ahead to convince people that this is a good investment," Gaynor said.
On Monday APN chief executive Michael Miller said an IPO was not necessarily contingent on a paywall being introduced first.
"While we have not announced specific timing yet, we are committed to the introduction of digital subscriptions at the right time," Miller said.
Salt Funds Management managing director Paul Harrison said APN's New Zealand businesses had good cashflows and there was potential for investors to receive reasonable dividends.
"If they can float something here that doesn't have the debt-loading of the parent [APN] then I think that could be possibly attractive on a yield basis," he said.
CCZ Equities media analyst Roger Colman told the Sydney Morning Herald that APN's New Zealand businesses could be valued at up to A$540 million ($600 million).
Rickey Ward, JBWere's New Zealand equity manager, said there were slim pickings on the NZX when it came to media firms and the potential float would fill a hole in the market.
"Like everything, it will come down to price," Ward said.
"The difficult part will be trying to value what growth there is in the business."
APN's New Zealand media division reported revenue of A$135.6 million on a local currency basis for the six months to June 30, down 13 per cent on the same period a year earlier.
Adjusting for the sale of a number of titles sold in April 2013 and February 2014, revenue fell 6 per cent.
Earnings before interest, tax, depreciation and amortisation (ebitda) in the New Zealand media division also fell 13 per cent to A$22.7 million.