Reporting Season

Seven West Media upgrades full-year guidance, eyes "capital management"

Tue 15 Feb 22, 11:39am (AEST)
Channel Seven SWM

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Key Points

  • The Tokyo Olympics and AFL Grand Final lifted Seven's ratings and TV performance
  • FY22 earnings upgraded, 38-42% growth expected versus FY21

Seven West Media (ASX: SWM) shares began to move ahead of Tuesday's earnings release, rallying 30% between 1-10 February.

It looks like the price action was on the money, after Seven announced a robust first-half FY22 performance. 

Financials at a glance: 

  • Revenue of $820m, up 27% 

  • Net profit of $129m, up 48% 

  • Net debut reduced by $212.4m to $116.7m 

  • Upgraded FY22 earnings guidance to $315m to $325m

“This result reflects the successful execution of our strategy over the past 30 months. We have a television network that has returned to the #1 position in a robust advertising market; a fast-growing digital business that now makes up 35% of earnings,” said CEO James Warburton. 

“We have completed the acquisition of the assets of Prime Media Group, which unlocks an unrivaled opportunity for the business to capture a greater share of the $3.8bn total television market.”

Catalyst rich first-half

Seven's TV advertising revenues were bolstered by major television and streaming events including the Tokyo Olympic Games, The Voice and the AFL Grand Final.

"Our new entertainment schedule is driving television ratings gains and significant growth for 7plus. Over 11 million users are now registered on 7plus and we expect this to grow further with the Winter Olympics in Beijing," said Warburton.

FY22 outlook 

The upgraded FY22 earnings guidance represents 38-42% growth on FY21.

The Board said it will assess capital management options during the second-half to further enhance shareholder value. This could put initiatives such as a share buy-back or reinstating dividends on the cards.

What brokers think

Broker consensus views Seven West as a Strong Buy.

Four major Australian brokers have an average price target of 86.5 cents (21% upside).

From a valuation perspective, brokers said that traditional media stocks are more conservatively priced amid a rocky period of rising bond yields.

Macquarie was anticipating an earnings upgrade leading into today's result, expecting strong market share gains and favourable viewing conditions.

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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