APN Outdoor: A strong year of revenue growth ahead
David Allingham, Analyst, Eley Griffiths Group
APN Outdoor (ASX:APO) reported a result that was 5% ahead of prospectus forecasts. Outdoor advertising has been the best performing traditional media class in the last ten years, growing at a 6% cagr. This growth rate accelerated to 10% in CY14 versus a broader ad market that was flat. APO is also in the process of digitising their panels and now has 34 large format digital screens in place. Digital billboards offer dynamic pricing and higher utilization delivering around 4x the revenues of static panels. The company sees the potential to digitise up to 200 large format panels over time and will convert a further 17 new screens in CY15. New digitised trackside (rail) panels have also outperformed expectations. With 27% share in the outdoor ad market and the revenue uplift from digital rollout APO will see a strong year of earnings growth in CY15.
GBST: Improving margins and a pipeline of growth
Steve Johnson, CIO, Forager Funds Management
GBST (ASX:GBT) was the standout performer from my portfolio. They met our expectations on revenue, the margins were much improved and the growth pipeline looks even better. There are still some growing pains that need to be remedied but it’s one of a handful of ASX listed companies with solid growth prospects.
Three company reports that exceeded expectations
Justin Braitling, CIO, Watermark Funds Management
QBE Insurance (ASX:QBE) delivered stronger than expected insurance margins given the well flagged headwinds from lower discount rates/bond yields. The result included reserve releases rather than reserve top ups as has been the case more recently. There was also considerable increase in reinsurance and aggregate cover and hedging in crop business which reduces guidance risk for next year.
Beacon Lighting (ASX:BLX) exceeded our expectations with a strong trading update. Beacon Lighting is a clear beneficiary from the strong housing cycle as well as lower petrol prices and interest rates.
Nine Entertainment (ASX:NEC) also delivered a strong result with a positive trading update. Despite what appears to be a soft advertising market and concerns for the health of free to air TV, the company reported a good increase in revenue for the beginning of the year. Nine Entertainment has some nice optionality in their portfolio around content costs and affiliation deals. After significant underperformance the stock has rallied on the back of the result.
iSentia result surprised the market
Gaurav Sodhi, Analyst, Intelligent Investor
iSentia (ASX:ISD) surprised the market. Revenue and margins were much stronger than we expected. The business was successful in selling additional, high margin options making it easier to search its database services, while moving to a subscription as a service pricing model that should lead to price increases. Revenue per customer shot up; margins shot up and profit was much stronger than expected. The shares have rallied about 30% since the result suggesting the market was also surprised by how strong the result was.
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