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FEP
Finance Club
Corporate Finance Department | www.fepfinanceclub.org
15/04/2016
Media Market
Since the crisis of 2007, AD spending has been
dropping constantly, reflecting the Portuguese
economy. From 2010 to 2015 we saw a CAGR of 11.18%.
AD Market
Duopol y in TV segment
On March 7, 1957 public broadcaster Rdio e
Televiso de Portugal (RTP) began broadcasting
RTP1, the first television channel in the country. A
second RTP channel, RTP2, started broadcasting on
December 25, 1968. Private commercial channels
were launched in the early 1990s, with SIC on
October 6, 1992 and TVI on February 20, 1993.
Public television is still the most watched in 2016, but
Pay-Tv market is still growing as penetration in
Portugal has been growing following the push from
Telecom operators. Differently from other countries
the main channels with bigger audience from PAY-TV
are the news channels.
Pay-Tv household Penetration
INE
INE
1
Corporate Finance Department | www.fepfinanceclub.org
15/04/2016
Summary
In the Portuguese advertisement market we can find
three big players: MEDIA CAPITAL, COFINA and
IMPRESA.
Investment Comparison
Press AD Revenues
Yahoo Finance
Companies Data
Main Risks
Evolution of Advertising Market: on-going process
fragmentation and diversification
Development of Media Sector: Technology is
disrupting the media industry by broadening the
competitive landscape and changing habits of media
consumption
Content Production: high investment risk
production of proprietary high-quality content.
in
Valuation Methodology
ACPT and FFC Analysis
1Y Price Targets
Current Price 1Y Target
IMPRESA
MEDIA-CAPITAL
COFINA
0.35
2.50
0.36
0.32
3.64
0.25
%
-9.28%
45.59%
-30.42%
FFC Analysis
Note
The following content is original and created by the
FEP Finance Club, which is run by students from
School of Economics and Management of Porto. The
report may contain inaccurate or outdated information
and should not be used as an exclusive mean for
investment decisions.
INE, Company Data and FFC Analysis
2
Corporate Finance Department | www.fepfinanceclub.org
15/04/2016
Date: 15/04/2016
Ticker: IPR.LS
Share Price
Business Description
Impresa Sociedade Gestora de Participaes Sociais SA (IMPRESA SGPS SA) is
a Portugal-based holding company involved in the media industry, with interests
covering television broadcasting, newspapers and magazines publishing, among
others.
Yahoo Finance
Market Profile
52-Week High/Low 0.32 - 1.02
Avg. Vol (3M)
138
Shares Outs.
168M
Market Cap.
59.14M
Dividend Yield
0,00%
BETA
1.74
Revenue/Share
1.37
EV/EBITDA
10.44
PER
12.48
Free Float
49.69%
Closing Price
0.35
Investing.com
Multiples
The Company divides its business into three main segments: Television segment,
which includes video production and operation of private television channels in
Portugal, such as SIC, SIC Noticias, SIC Radical, SIC Internacional and SIC;
Publishing segment, which is active in the publishing of a range of newspapers and
magazines, including such titles as Expresso, Viso, Exame and Caras, and
Others segment, which comprises activities in the real estate sector, multimedia
solutions and geo-location technological solutions.
As of December 31, 2011, the Companys subsidiaries included Impresa
Publishing SA, SIC - Sociedade Independente de Comunicao SA, Impresa
Digital Produo Multimedia Lda and Impresa Servios Sociedade Unipessoal Lda,
among others.
Key Ratios
Total Revenues
Net Profit
EBITDA Margin
Return on Assets
Return on Equity
Cash Conversion Cycle
Debt/Assets
Financial Leverage
Interest Coverage
PER
EV/EBITDA
Net Debt/EBITDA
2014
2015
2016F
2017F
2018F
2019F
2020F
237,8
230,9
225,2
227,6
230,1
232,7
235,5
11,0
4,0
4,0
4,8
5,6
6,4
7,2
0,1
0,1
0,1
0,1
0,1
0,1
0,1
0,0
0,0
0,0
0,0
0,0
0,0
0,0
0,1
0,0
0,0
0,0
0,0
0,0
0,0
15,1 15,7 - 15,7 15,7 - 15,7 - 15,7 - 15,7
0,7
0,6
0,6
0,6
0,6
0,6
0,6
2,0
1,8
1,8
1,8
1,7
1,7
1,6
2,5
1,6
1,6
1,7
1,9
2,0
2,1
12,1
14,6
13,4
13,4
13,5
13,6
13,8
10,0
10,0
8,9
9,7
9,4
9,0
8,7
5,5
7,5
7,7
7,0
6,3
5,7
5,1
The company increased its subscription revenues by 11.7% YoY, but its publishing
side dropped 2.7% leading to a drop in advertising by 2.2% YoY. The continuation
of the plus the restructuring effect of its operational business leads to a small
decrease in the next year reaching an EBITDA Mg of 9.65% 1YF.
FFC Analysis
Its deleveraging process is still in place since 2008, however due to expected drop
on EBITDA, its Net Debt / EBITDA is expected to maintain in the upcoming years.
Sensitivity Analysis
The company has a target to tighten its operational costs, keep the deleveraging
effect and start turning the company ratios around.
WACC
Growth Rate
Sens.
Analysis
1,75% 2,00% 2,25%
7,76% 0,38
0,43
0,48
8,26% 0,28
0,32
0,36
8,76% 0,19
0,22
0,26
With the recovery of the Portuguese economy ROE is expected to start growing
but is still too low when taking into consideration the risk that the company is
facing.
FFC Analysis
3
Corporate Finance Department | www.fepfinanceclub.org
15/04/2016
P&L
EBITDA
Million
Revenues
Television
Publishing
Others
Operational Costs
COGS
Services
Staff
Others
EBITDA
Depreciations
EBIT
Financial Operations
EBT
Taxes
Net Profit
TV
Total Revenues
Advertising revenues
Subscription revenues
Others
Publishing
Total revenues
Advertising revenues
Publish
Others
2012
228,56
158,65
68,67
1,24
207,99
81,52
64,17
59,66
2,64
20,57
11,39
9,18
13,35
- 4,16
1,05
- 5,22
2013
237,18
173,54
63,13
0,51
205,55
79,16
71,66
52,39
2,35
31,63
6,54
25,09
11,80
13,29
6,69
6,60
2014
237,78
177,60
58,77
1,41
205,47
81,40
67,81
53,69
2,58
32,31
4,42
27,89
11,34
16,55
5,55
11,01
2015
230,92
173,64
55,77
1,51
207,78
82,51
67,32
55,90
2,05
23,14
4,44
18,70
11,99
6,71
2,69
4,03
2016F
225,23
170,25
53,52
1,47
203,51
80,04
65,59
55,80
2,08
21,73
4,49
17,23
10,58
6,66
2,66
3,99
2017F
227,61
174,79
51,33
1,48
204,51
80,43
66,21
55,70
2,16
23,10
4,34
18,76
10,75
8,01
3,20
4,80
2018F
230,10
179,50
49,10
1,50
205,57
80,87
66,86
55,60
2,25
24,53
4,26
20,27
10,92
9,34
3,74
5,60
2019F
232,72
184,39
46,82
1,52
206,71
81,33
67,54
55,51
2,33
26,01
4,24
21,77
11,10
10,67
4,27
6,40
2020F
235,47
189,45
44,48
1,54
207,92
81,83
68,26
55,41
2,42
27,55
4,28
23,27
11,27
12,00
4,80
7,20
158,65
87,38
45,10
26,16
173,54
88,25
44,43
40,86
177,60
94,64
45,13
37,83
173,64
93,89
50,42
29,33
170,25
89,24
51,34
29,66
174,79
91,15
52,25
31,39
179,50
93,14
53,17
33,19
184,39
95,23
54,08
35,08
189,45
97,40
55,00
37,05
68,67
29,85
30,43
8,38
63,13
27,95
27,32
7,86
58,77
27,11
25,70
5,96
55,77
25,58
25,00
5,19
53,52
25,14
23,54
4,84
51,33
24,73
22,09
4,51
49,10
24,28
20,63
4,18
46,82
23,76
19,18
3,87
44,48
23,19
17,74
3,56
2017F
417,46
300,89
0,53
25,33
9,95
22,11
23,81
20,40
1,83
12,62
150,57
266,89
182,08
3,83
5,97
35,43
39,58
2018F
426,38
300,89
0,53
24,70
9,95
22,11
24,07
29,66
1,85
12,62
156,17
270,21
184,96
3,87
5,97
35,82
39,58
2019F
436,12
300,89
0,53
24,42
9,95
22,11
24,35
39,38
1,87
12,62
162,58
273,54
187,84
3,92
5,97
36,22
39,58
2020F
446,67
300,89
0,53
24,42
9,95
22,11
24,63
49,63
1,89
12,62
169,78
276,90
190,73
3,96
5,97
36,65
39,58
BS
Net Debt
Assumptions
RF
3,99%
Def. Spread 2,01%
Kd
6,00%
Beta
1,33
MRP
6,00%
Ke
11,94%
WACC
8,26%
Source: Team Estimates
Million
Total Assets
Goodwill
Intangible
Fixed Assets
Net Investments
Program Rights
Clients
Cash and Equivalents
Inventory
Others
Equity
Liabilities
IBD
Provisions
Financial Leases
Suppliers
Others
2012
421,04
300,89
0,45
30,62
12,81
30,1057
28,84
1,89
2,02
13,42
120,05
300,99
205,98
5,14
14,69
34,12
41,06
2013
421,88
300,89
0,33
29,29
12,89
25,70
37,46
1,43
2,20
11,69
126,87
295,01
189,66
5,89
11,09
40,96
47,40
2014
407,08
300,89
0,47
28,18
12,50
22,69
24,71
4,82
1,85
10,96
137,60
269,48
181,22
5,31
8,22
36,37
38,36
2015
403,47
300,89
0,53
27,84
9,95
22,11
24,16
3,52
1,86
12,62
141,77
261,70
176,32
3,89
5,97
35,94
39,58
2016F
409,37
300,89
0,53
26,35
9,95
22,11
23,56
11,55
1,81
12,62
145,77
263,60
179,20
3,79
5,97
35,06
39,58
FCFF
Million
EBIT
EBIT (1-T)
CAPEX
D&A
-WCI
FCFF
2013
2014
2015
2016F
25,09
27,89
18,70
17,23
12,46
18,55
11,22
10,34
- 0,96 - 0,68
2,68
3,00
6,54
4,42
4,44
4,49
- 1,19
7,92 - 1,30 - 0,34
18,77
31,55
11,67
11,49
2017F
18,76
11,25
3,32
4,34
0,14
12,42
2018F
20,27
12,16
3,64
4,26
0,15
12,93
2019F
21,77
13,06
3,96
4,24
0,16
13,50
2020F
23,27
13,96
4,28
4,28
0,16
14,13
4
Corporate Finance Department | www.fepfinanceclub.org
15/04/2016
Date: 15/04/2016
Ticker: CFN.LS
Headquarters: Porto
Potential: -30.42%
Business Description
Share Price
Market Profile
52-Week High/Low 0.36 - 0.62
Avg. Vol (3M)
72 744
Shares Outs.
102.57M
Market Cap.
36.92M
Dividend Yield
5.56%
BETA
0.89
Revenue/Share
1.01
EV/EBITDA
6.80
PER
7.30
Free Float
32.35%
Closing Price
0.36
Investing.com
Multiples
Key Ratios
Total Revenues
Net Profit
EBITDA Margin
Return on Assets
Return on Equity
Cash Conversion Cycle
Debt/Assets
Financial Leverage
Interest Coverage
PER
EV/EBITDA
Net Debt/EBITDA
2014
106,1
6,2
0,2
0,0
0,1
66,5
0,6
0,7
3,9
7,7
6,4
3,6
FFC Analysis
Sensitivity Analysis
By transforming its business, COFINA will have better gross margins but the huge
WACC
WACC
Growth Rate
Sens.
Growth
Rate drop in revenues will lead to a decrease in EBITDA Mg.
Sens. 1,75% 2,00%
Analysis
2,25%
Analysis
2,00%
2,25%
7,83% 0,29 1,75%
0,31
0,34
The companys financial situation will be put at pressure, with Interest coverage
8,33%
0,23
0,25
0,28
7,83% 0,29
0,31
0,34 tending to values near one. ROE and ROA also tend to decrease nto being
ratio
8,83% 0,18
0,20
0,22
8,33% 0,23
FFC Analysis
8,83% 0,18
0,25
0,20
enough
0,28 to cover its risks.
0,22
5
Corporate Finance Department | www.fepfinanceclub.org
15/04/2016
P&L
EBITDA
Net Debt
Million
Revenues
Circulation
Advertising
Others
Operational Costs
COGS
Services
Staff
Others
EBITDA
Depreciations
EBIT
Financial Operations
EBT
Taxes
Net Profit
2012
113,33
60,08
39,56
13,70
96,69
17,82
45,35
33,21
0,31
16,64
3,27
13,37
3,46
9,90
5,65
4,25
2013
107,66
56,56
34,83
16,27
90,03
15,44
42,17
32,37
0,04
17,63
5,27
12,36
3,26
9,09
4,29
4,80
2014
106,08
54,42
36,71
14,95
87,87
14,76
41,15
31,65
0,31
18,21
4,89
13,32
3,42
9,89
3,64
6,25
2015
100,68
52,85
33,80
14,03
85,69
12,76
41,16
31,49
0,28
14,98
2,84
12,15
3,77
8,38
3,32
5,06
2016F
98,14
51,06
33,43
13,65
84,08
12,73
39,90
31,19
0,26
14,06
2,18
11,88
4,20
7,68
3,07
4,61
2017F
95,64
49,26
33,11
13,28
82,49
12,69
38,66
30,90
0,25
13,15
1,91
11,25
4,39
6,86
2,74
4,12
2018F
93,03
47,44
32,70
12,89
80,84
12,62
37,38
30,60
0,23
12,20
1,79
10,41
4,57
5,83
2,33
3,50
2019F
90,30
45,60
32,21
12,49
79,11
12,52
36,08
30,30
0,22
11,19
1,77
9,42
4,76
4,66
1,86
2,79
2020F
87,44
43,75
31,62
12,07
77,31
12,38
34,73
30,00
0,20
10,12
1,82
8,31
4,94
3,36
1,35
2,02
2019F
147,76
88,79
0,19
3,05
3,17
8,23
29,85
1,74
12,73
29,38
118,38
82,40
12,14
12,13
11,71
2020F
150,51
88,79
0,19
3,05
3,17
7,86
33,05
1,68
12,73
29,34
121,16
85,50
11,98
11,98
11,71
BS
Million
Total Assets
Goodwill
Intangible
Fixed Assets
Net Investments
Clients
Cash and Equivalents
Inventory
Others
Equity
Liabilities
IBD
Provisions
Suppliers
Others
2012
142,42
93,40
0,63
8,17
3,92
7,10
15,74
2,08
11,37
14,74
127,68
97,40
6,43
8,72
15,13
2013
137,19
90,95
0,48
7,18
4,44
9,41
10,32
2,25
12,16
18,04
119,15
88,35
8,50
8,30
14,00
2014
134,51
89,32
0,49
5,88
3,90
9,09
12,66
1,87
11,30
20,28
114,23
77,55
10,32
9,16
17,20
2015
129,25
88,79
0,19
4,47
3,17
9,71
8,19
1,99
12,73
22,57
106,68
70,02
12,49
12,47
11,71
2016F
134,78
88,79
0,19
3,69
3,17
9,34
14,94
1,93
12,73
25,12
109,66
73,11
12,43
12,41
11,71
2017F
139,81
88,79
0,19
3,29
3,17
8,97
20,80
1,87
12,73
27,18
112,63
76,21
12,36
12,35
11,71
2018F
144,17
88,79
0,19
3,11
3,17
8,61
25,77
1,81
12,73
28,63
115,53
79,31
12,26
12,25
11,71
Assumptions
RF
Kd
Beta
MRP
Ke
WACC
3,99%
6,00%
2,33
6,00%
17,97%
8,33%
FCFF
EBIT
EBIT (1-T)
CAPEX
D&A
-WCI
FCFF
2013
12,36
6,52
2,99
5,27
- 0,82
7,98
2014
13,32
8,41
0,56
4,89
3,37
16,11
2015
12,15
7,34
1,30
2,84
4,73
13,61
2016F
11,88
7,13
1,40
2,18
0,32
8,23
2017F
11,25
6,75
1,51
1,91
0,29
7,44
2018F
10,41
6,24
1,61
1,79
0,24
6,67
2019F
9,42
5,65
1,71
1,77
0,19
5,90
2020F
8,31
4,98
1,82
1,82
0,13
5,11
6
Corporate Finance Department | www.fepfinanceclub.org
15/04/2016
Date: 15/04/2016
Ticker: MCP.LS
Share Price
Business Description
Grupo Media Capital SGPS SA (Media Capital) is a Portugal-based company
active in the media industry.
The Company operates essentially in Portugal, Spain and Latin America. The
structure adopted by Media Capital comprises six segments: Television,
Audiovisual Production, Music and Entertainment, Cinema and Video, Radio, and
Internet.
Yahoo Finance
Market Profile
52-Week High/Low 2.14 - 2.50
Avg. Vol (3M)
377
Shares Outs.
84.51M
Market Cap.
211.28M
Dividend Yield
7.49%
BETA
0.12
Revenue/Share
2.04
EV/EBITDA
7.89
PER
12.21
Free Float
0.26%
Closing Price
2.50
Investing.com
Multiples
2014
179,8
8,4
0,0
0,0
0,1
99,3
0,6
1,5
0,3
15,1
5,8
86,1
2015
174,4
7,8
0,0
0,0
0,1
98,2
0,6
1,4
0,3
27,3
9,9
72,2
2016F
164,0
5,8
0,0
0,0
0,0
98,1
0,6
1,4
0,4
53,3
11,2
71,9
2017F
166,1
6,6
0,0
0,0
0,0
98,0
0,6
1,4
0,3
48,4
10,8
68,4
2018F
168,4
7,4
0,0
0,0
0,1
98,0
0,6
1,4
0,3
45,3
10,4
65,3
2019F
170,9
8,0
0,0
0,0
0,1
97,9
0,6
1,3
0,3
43,1
10,1
62,3
2020F
173,4
8,7
0,0
0,0
0,1
97,9
0,6
1,3
0,2
41,6
9,8
59,6
FFC Analysis
Sensitivity Analysis
WACC
Growth Rate
Sens.
Analysis
1,75% 2,00% 2,25%
7,46% 3,89
4,09
4,32
7,96% 3,47
3,64
3,82
8,46% 3,11
3,25
3,41
FFC Analysis
Media Capitals EBITDA improved 6% YoY in 4Q. For the full year, there was a
slight decrease of 2%, to 40.1 million, with a corresponding margin of 23%.
Consolidated advertising revenues went up by 5% YoY in the quarter and 2% for
2015 as a whole.
The TV segment posted an EBITDA of 13.0 million in Q4. For the full year, the
EBITDA was 31.6 million and the margin 22.3%. The Audiovisual Production
segment registered an annual EBITDA of 1.1 million (vs. 1.0 million in 2014)
and a 4Q EBITDA of 1.3.
Although it has a 45.59% upside potential, there is a high risk associated with this
stock: the lack of liquidity. As the Free flow is only 0.26% the liquidity risk is not
taken into consideration in our analysis.
7
Corporate Finance Department | www.fepfinanceclub.org
15/04/2016
P&L
EBITDA
Net Debt
Assumptions
RF
Kd
Beta
MRP
Ke
WACC
3,99%
5,00%
1,29
6,00%
11,72%
7,96%
Million
Revenues
TV Advertising
Radio Advertising
Other Advertising
Others
Operational Costs
COGS
Services
Staff
Others
EBITDA
Depreciations
EBIT
Financial Operations
EBT
Taxes
Net Profit
2012
184,32
94,26
13,44
3,17
73,45
143,93
22,37
68,22
52,82
0,51
40,39
10,70
29,69
9,69
20,01
8,07
11,94
2013
181,72
86,10
13,43
3,15
79,03
143,64
25,74
66,78
50,50
0,62
38,07
8,67
29,40
8,82
20,58
6,90
13,68
2014
179,77
96,19
14,71
3,41
65,47
137,46
23,68
66,08
45,90
1,80
42,32
9,88
32,44
7,57
24,86
8,39
16,48
2015
174,39
97,56
16,05
3,14
57,64
133,17
17,52
70,09
43,45
2,11
41,22
10,26
30,96
5,91
25,05
7,75
17,30
2016F
163,97
92,74
15,10
2,92
53,20
126,60
17,24
66,50
40,76
2,11
37,36
10,50
26,86
5,89
20,97
5,77
15,20
2017F
166,15
94,74
15,54
2,97
52,89
126,51
18,24
67,98
38,07
2,21
39,64
9,70
29,94
5,91
24,03
6,61
17,42
2018F
168,44
96,83
16,00
3,02
52,59
126,51
19,28
69,53
35,38
2,32
41,93
9,24
32,69
5,93
26,76
7,36
19,40
2019F
170,87
99,01
16,47
3,07
52,30
126,62
20,36
71,15
32,69
2,43
44,25
9,03
35,22
5,96
29,26
8,05
21,22
2020F
173,42
101,30
16,97
3,13
52,03
126,85
21,47
72,84
30,00
2,54
46,58
8,97
37,61
5,98
31,63
8,70
22,93
2017F
325,86
153,18
15,17
11,52
1,60
82,99
37,95
9,20
0,02
14,24
136,37
189,49
118,66
6,68
35,80
28,34
2018F
329,22
153,18
15,17
10,76
1,60
82,99
38,49
12,77
0,02
14,24
139,30
189,92
119,11
6,73
35,74
28,34
2019F
334,19
153,18
15,17
10,46
1,60
82,99
39,07
17,47
0,02
14,24
143,83
190,36
119,55
6,78
35,68
28,34
2020F
340,67
153,18
15,17
10,46
1,60
82,99
39,67
23,34
0,02
14,24
149,86
190,81
120,00
6,83
35,63
28,34
BS
Million
Total Assets
Goodwill
Intangible
Fixed Assets
Net Investments
Program Rights
Clients
Cash and Equivalents
Inventory
Others
Equity
Liabilities
IBD
Provisions
Suppliers
Others
2012
351,28
153,57
18,49
21,62
1,60
79,91
40,91
10,79
0,19
24,22
126,09
225,19
113,37
7,73
53,07
51,02
2013
334,62
153,57
15,97
17,36
1,62
79,56
42,09
5,24
0,10
19,12
128,53
206,09
110,81
6,60
45,44
43,23
2014
332,04
153,57
13,83
16,26
1,69
82,07
41,94
3,00
0,04
19,65
134,89
197,15
118,72
6,94
42,48
29,01
2015
328,00
153,18
15,17
15,48
1,60
82,99
39,79
5,55
0,01
14,24
136,03
191,97
117,77
7,11
38,75
28,34
2016F
324,28
153,18
15,17
12,97
1,60
82,99
37,43
6,69
0,01
14,24
135,20
189,08
118,22
6,64
35,88
28,34
FCFF
EBIT
EBIT (1-T)
CAPEX
D&A
-WCI
FCFF
2013
2014
2015
2016F 2017F 2018F 2019F 2020F
29,40
32,44
30,96
26,86
29,94
32,69
35,22
37,61
19,55
21,49
21,38
19,47
21,71
23,70
25,53
27,27
- 3,19
7,25
4,92
8,00
8,24
8,48
8,73
8,97
8,67
9,88
10,26
10,50
9,70
9,24
9,03
8,97
- 9,85 - 2,41 - 1,39 - 0,98 - 0,55 - 0,57 - 0,58 - 0,60
21,56
21,71
25,32
21,00
22,61
23,89
25,25
26,67
8
Corporate Finance Department | www.fepfinanceclub.org
15/04/2016
The Team
Director
Pedro Reis
Analysts
Catarina Lindo
Cludia Castro
Cludia Fernandes
Eduardo Magalhes
Gil Flores
Joo Santos
Joo Martins
Pedro Silva
Tiago Paiva
pedro.reis@fepfinanceclub.org
Media
catarina.lindo@fepfinanceclub.org
claudia.castro@fepfinanceclub.org
catarina.fernandes@fepfinanceclub.org
eduardopmagalhaes@fepfinanceclub.org
gil.flores@fepfinanceclub.org
joao.santos@fepfinanceclub.org
joao.martins@fepfinanceclub.org
pedro.silva@fepfinanceclub.org
tiago.paiva@fepfinanceclub.org
9
Corporate Finance Department | www.fepfinanceclub.org