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Corporate Finance Department | www.fepfinanceclub.org
Portuguese e!ia
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e!ia ar"et
Since the crisis of 2007, AD spending has beendropping constantly, reflecting the Portugueseeconomy. From 2010 to 201 !e sa! a "A#$ of
%11.1&'.
#D ar"et
()* and *urostat
As the economy reco+ers, !e epect an annual #DPgro!th of 1.' until 2020 and 2' from that year.-o!e+er the percentage of #DP in AD spending isepected to gro! slightly until 0.&' by 2020,reflecting the historical a+erage/ "A#$ of 1.'.
#D ar"et forecast
FF" Analysis
hile tele+ision is still the preferred channel of spending, the (nternet and Digital maret are gro!ingrapidly !hich is in line !ith the !orld!ide trend. 3nthe other hand !e ha+e press and radio losing their preference amongst the Portuguese community.
#D ar"et $tructure
()*
e epect a continuation of this trend as 45 gains asmall maret and !ith the (nternet and Digital 6aretgro!ing the most, !ith a representation of 1&' by2020, more , p.p. than 201.
Duopol% in &' segment
3n 6arch 7, 17 public broadcaster Rádio eTelevisão de Portugal (RTP) began broadcastingRTP1, the first tele+ision channel in the country. Asecond RTP channel, RTP2 , started broadcasting onDecember 2, 1&. Pri+ate commercial channels!ere launched in the early 10s, !ith SIC on3ctober , 12 and TVI on February 20, 1.
Public tele+ision is still the most !atched in 201, butPay%4+ maret is still gro!ing as penetration inPortugal has been gro!ing follo!ing the push from4elecom operators. Differently from other countriesthe main channels !ith bigger audience from PA8%45are the ne!s channels.
Pa%(&) *ouse*ol! Penetration
()*
(n the 45 AD segment all that matter is audienceshare, mainly prime time, from 20h00 to 00h00. 45(has the lead, as from 9anuary 201, !ith 22.:'follo!ed by S(" !ith 17.'. 4hey belong to 6*D(A"AP(4A; and (6P$*SA, respecti+ely, !hich
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Press ( from paper to !igital
Press has also reached its pea in 2007, and hasbeen dropping e+er since.. (n this segment !e canalso differentiate t!o main players/ (6P$*SA and"3F()A, !ith Correio da Ma!ã and P"#lico as themain ne!spapers, respecti+ely.
Press #D +e)enues
"ompanies Data
)ot only are the re+enues dropping but also thenumber of ne!spapers and maga>ines in circulation.?y the end of 201 only 10 of the 171 @2011maga>ines and ne!spapers !ere still ali+e.
&otal number in Circulation ,illions-
A"P4 and FF" Analysis
"ompanies started to react to this macro%economictrend, as ne!spaper and maga>ines can no! befound online and on mobile.
+a!io is still wort* mentioning
$adio has a small piece of the pieB ho!e+er 6*D(A
"AP(4A; !ith Rádio Co$ercial , amongst others, hasgained a huge maret share in the past three years.
e!ia Capital ar"et $*are
()*, "ompany Data and FF" Analysis
$ummar%
(n the Portuguese ad+ertisement maret !e can findthree big players/ 6*D(A "AP(4A;, "3F()A and(6P$*SA.
n)estment Comparison
8ahoo Finance
6*D(A "AP(4A; and "3F()A leaders in 45 andPress segment, respecti+ely, follo!ed by (6P$*SA inboth segments
ain +is"s)olution of #!)ertising ar"et/ on%going processfragmentation and di+ersification
De)elopment of e!ia $ector 4echnology isdisrupting the media industry by broadening thecompetiti+e landscape and changing habits of mediaconsumption
Content Pro!uction high in+estment ris inproduction of proprietary high%Cuality content.
'aluation et*o!olog% A discounted cash flo! analysis !as used to estimatethe intrinsic +alue of companies share price due to thepredictability of cash flo!s in relation to gro!th andprofitability. 4he model is forecasted for fi+e years!hich is hea+ily dependent on macro%economicfactors. e also perform a +aluation cross%chec for the implied *5*?(4DA and P*$ for each company.
1 Price &argets
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Corporate Finance Department | www.fepfinanceclub.org
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FF" Analysis
ote4he follo!ing content is original and created by theF*P Finance "lub, !hich is run by students fromSchool of *conomics and 6anagement of Porto. 4hereport may contain inaccurate or outdated informationand should not be used as an eclusi+e mean for in+estment decisions.
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Corporate Finance Department | www.fepfinanceclub.org
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3ea!uarters Pao !e #rcos 7eiras Current Price 80.95Potential (:.2;< &arget Price 80.92
=usiness Description
(mpresa Sociedade #estora de ParticipaEes Sociais SA @(6P$*SA S#PS SA is a Portugal%based holding
company in+ol+ed in the media industry, !ith interests co+ering tele+ision broadcasting, ne!spapers and
maga>ines publishing, among others.4he "ompany di+ides its business into three main segments/ 4ele+ision segment, !hich includes +ideo production
and operation of pri+ate tele+ision channels in Portugal, such as SIC , SIC Noticias, SIC Radical , SIC Iteracioal
and SIC B Publishing segment, !hich is acti+e in the publishing of a range of ne!spapers and maga>ines, including
such titles as %&'resso, Visão, %&a$e and Caras, and 3thers segment, !hich comprises acti+ities in the real
estate sector, multimedia solutions and geo%location technological solutions.
As of December 1, 2011, the "ompanyGs subsidiaries included (mpresa Publishing SA, S(" % Sociedade
(ndependente de "omunicaEHo SA, (mpresa Digital ProduEHo 6ultimedia ;da and (mpresa Ser+iEos Sociedade
Inipessoal ;da, among others.
Source/ "ompany Data and FF" Analysis
4he company increased its subscription re+enues by 11.7' 8o8, but its publishing side dropped 2.7' leading to adrop in ad+ertising by 2.2' 8o8. 4he continuation of the plus the restructuring effect of its operational businessleads to a small decrease in the net year reaching an *?(4DA 6g of .' 18F.
(ts dele+eraging process is still in place since 200&, ho!e+er due to epected drop on *?(4DA, its )et Debt *?(4DA is epected to maintain in the upcoming years.
4he company has a target to tighten its operational costs, eep the dele+eraging effect and start turning thecompany ratios around.
ith the reco+ery of the Portuguese economy $3* is epected to start gro!ing but is still too lo! !hen taing intoconsideration the ris that the company is facing.
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Corporate Finance Department | www.fepfinanceclub.org
$*are Price
8ahoo Finance
ultiples
(n+esting.com
$ensiti)it% #nal%sis
FF" Analysis
FF" Analysis
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P>?
=$
FCFF
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Corporate Finance Department | www.fepfinanceclub.org
+e)enue structure 2016F
Source/ 4eam *stimates
Source/ 4eam *stimates
=&D#
et Debt
Source/ 4eam *stimates
#ssumptions
Source/ 4eam *stimates
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3ea!uarters Porto Current Price 80.96Potential (90.42< &arget Price 80.25
=usiness Description
"ofina S#PS SA @"ofina is a Portugal%based holding company primarily in+ol+ed in the publishing industry.
4he "ompany de+elops acti+ities in the area of media and content through traditional press and online publications
in +arious segments, including general information, sport, business and automobile, among others.
4he "ompany is engaged in the publishing of a number of ne!spaper and maga>ine titles, such as Correio da
Ma!ã, oral de Negcios, *esta+ , Record , Metro, Sá#ado, Ma&i$a, Vogue and ,uto$otor , among others.
As of December 1, 2011, the "ompany had a number of subsidiaries, including "ofina 6edia S#PS, 6etrone!s %
PublicaEes SA, 6ediafin S#PS SA, Presseli+re % (mprensa ;i+re SA, #rafedisport % (mpressHo e Artes #rJficas
SA and eb ors % Desen+ol+imento de AplicaEes, among others.
"ompany Data and FF" Analysis
"3F()AGs re+enues has been se+ered punished by the macro economic landscape that Portugal is passingthrough, dropping 2.2' "A#$ since 201 until 201. ;ooing for!ard things are not epected to get better, e+entaing into consideration the efforts to go digital.
?y transforming its business, "3F()A !ill ha+e better gross margins but the huge drop in re+enues !ill lead to adecrease in *?(4DA 6g.
4he companyGs financial situation !ill be put at pressure, !ith (nterest co+erage ratio tending to +alues near one.$3* and $3A also tend to decrease nto being enough to co+er its riss.
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Corporate Finance Department | www.fepfinanceclub.org
$*are Price
(n+esting.com
8ahoo Finance
FF" Analysis
ultiples
$ensiti)it% #nal%sis
FF" Analysis
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P>?
=$
FCFF
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Corporate Finance Department | www.fepfinanceclub.org
Source/ 4eam *stimates
=&D#
et Debt
Source/ 4eam *stimates
#ssumptions
Source/ 4eam *stimates
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3ea!uarters @ueluA !e =aiBo7eiras Current Price 82.50
Potential 45.5: < &arget Price 89.64
=usiness Description
#rupo 6edia "apital S#PS SA @6edia "apital is a Portugal%based company acti+e in the media industry.
4he "ompany operates essentially in Portugal, Spain and ;atin America. 4he structure adopted by 6edia "apitalcomprises si segments/ 4ele+ision, Audio+isual Production, 6usic and *ntertainment, "inema and 5ideo, $adio,and (nternet.
4hrough its subsidiaries, 6edia "apital is engaged in the tele+ision @45 broadcastingB production of 45 programs,mo+ies and audio+isual !orsB production and broadcasting of radio programsB music publishingB e+ents productionand pro+ision of agency ser+ices to artistsB distribution of mo+ie rightsB (nternet ad+ertising, and creation of ebsites.
As of December 1, 2011, the "ompany !holly o!ned 6edia #lobal S#PS SA, !hich !as in possession of +arioussubsidiaries, such as 45( 4ele+isHo (ndependente SA, 6"P 6edia "apital ProduEes SA, 6"$ (( 6edia "apital$adios SA and 6"6* 6edia "apital 6Ksica e *ntretenimento, among others.
Source/ "ompany Data and FF"
Analysis
6edia "apitalGs *?(4DA impro+ed ' 8o8 in :L. For the full year, there !as a slight decrease of 2', to M :0.1million, !ith a corresponding margin of 2'. "onsolidated ad+ertising re+enues !ent up by ' 8o8 in the Cuarter and 2' for 201 as a !hole.
4he 45 segment posted an *?(4DA of M1.0 million in L:. For the full year, the *?(4DA !as M 1. million and themargin 22.'. 4he Audio+isual Production segment registered an annual *?(4DA of M 1.1 million @+s. M 1.0 millionin 201: and a :L *?(4DA of M 1..
Although it has a :.' upside potential, there is a high ris associated !ith this stoc/ the lac of liCuidity. As theFree flo! is only 0.2' the liCuidity ris is not taen into consideration in our analysis.
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Corporate Finance Department | www.fepfinanceclub.org
$*are Price
8ahoo Finance
ultiples
(n+esting.com
FF" Analysis
$ensiti)it% #nal%sis
FF" Analysis
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P>?
=$
FCFF
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Corporate Finance Department | www.fepfinanceclub.org
#ssumptions
Source/ 4eam *stimates
et Debt
Source/ 4eam *stimates
=&D#
Source/ 4eam *stimates
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&*e &eam
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*duardo 6agalhHes eduardopmagalhaesNfepfinanceclub.org
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#il Flores gil.floresNfepfinanceclub.org 3il O #as9oHo Santos