By Pitt Street Research<\/p>\n
Unique combo of technology, content and advertising<\/span><\/span><\/span><\/strong><\/p>\n Swift Media Limited ((SW1)) is a technology, content and advertising service provider focused on the fast-growing closed loop and digital out-of-home market. It serves an installed base of circa 73,000 screens (forecast for YE FY19), offering digital entertainment solutions to a range of verticals, including hotels, aged-care and the resources industry.<\/span><\/span><\/span><\/p>\n Advertising to leverage installed base of screens<\/span><\/span><\/span><\/strong><\/p>\n SW1 has recently acquired the Digital Out-of-Home (DOoH) advertising business of Medical Media. DOoH advertising in Australia is growing at nearly 16% CAGR, which provides a strong revenue driver for SW1. SW1 intends to leverage its unique captive audience by offering highly targeted, high value advertisement opportunities to advertisers.<\/span><\/span><\/span><\/p>\n Operational synergies to drive margin expansion<\/span><\/span><\/span><\/strong><\/p>\n Medical Media’s advertising business has a circa 10% higher gross margin than SW1’s current businesses. As $3m in synergies set into the system and further network monetisation takes place, we expect the group’s margins to expand significantly.<\/span><\/span><\/span><\/p>\n Valuation range of $0.75–0.84 per share<\/span><\/span><\/span><\/strong><\/p>\n We believe SW1’s commercial opportunities and revenue potential are not accurately reflected in the company’s current valuation.<\/span><\/span><\/span><\/p>\n Driven by growth in the number of screens, the Medical Media acquisition and the new revenue stream from digital advertising on the installed base of screens, we value SW1 at $0.75 per share in our base case and $0.84 per share in an optimistic scenario, based on a blend of Discounted Cash Flow (DCF) and Sum Of The Parts-based relative valuations. <\/span><\/span><\/span><\/p>\n Download the full report<\/strong><\/p>\n Earlier today the report above was released by Pitt Street Research for which FNArena is a partner in distribution. The full report can be accessed here:<\/p>\n https:\/\/www.fnarena.com\/index.php\/pitt-street-research\/SW1\/<\/a><\/p>\n Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)<\/a>" – Warning this story contains unashamedly positive feedback on the service provided.<\/em><\/p>\n