Southern Cross Media Group Ltd. – Value Analysis (ASX:SXL) : July 11, 2017

Capitalcube gives Southern Cross Media Group Ltd. a score of 63.

Our analysis is based on comparing Southern Cross Media Group Ltd. with the following peers – Pacific Star Network Limited, Macquarie Media Limited, Seven West Media Limited and Ten Network Holdings Limited (PNW-AU, MRN-AU, SWM-AU and TEN-AU).

Investment Outlook

Southern Cross Media Group Ltd. has a fundamental score of 63 and has a relative valuation of UNDERVALUED.

Fundamental Score

Access our research and ratings on Southern Cross Media Group Ltd.

Company Overview

  • Compared to peers, relative underperformance last month is down from a median performance last year.
  • It’s current Price/Book of 0.95 is about median in its peer group.
  • SXL-AU‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • SXL-AU‘s relatively high profit margins are burdened by relative asset inefficiency.
  • Changes in the company’s annual revenue and earnings are around the median among its peers.
  • Over the last five years, SXL-AU‘s return on assets has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • While SXL-AU‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company’s capital investment seems appropriate for a business with peer median returns.
  • SXL-AU has additional debt capacity.

Access our research and ratings on Southern Cross Media Group Ltd.

Leverage & Liquidity

SXL-AU has additional debt capacity.

  • With debt at a reasonable 27.38% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 24.56%), and a well-cushioned interest coverage level of 6.02x, SXL-AU has the capacity to borrow some more.
  • All 4 peers for the company have an outstanding debt balance.

SXL-AU has moved to a relatively high liquidity from an Some Capacity profile at the prior year-end.

  • SXL-AU‘s interest coverage is its highest over the last four years and compares to a low of 2.65x in 2012.
  • The increase in its interest coverage to 6.02x from 3.19x (in 2015) was also accompanied by an increase in its peer median during this period to 6.02x from 4.82x.
  • Interest coverage rose 1.63 points relative to peers.
  • SXL-AU‘s debt-EV is its lowest over the last four years and compares to a high of 53.22% in 2015.
  • The decrease in its debt-EV to 27.38% from 53.22% (in 2015) was also accompanied by a decrease in its peer median during this period to 24.56% from 30.42%.
  • Relative to peers, debt-EV fell 19.98 percentage points. Unlike the peer median, it is also above the 25% leverage benchmark.

Access the detailed analysis for Southern Cross Media Group Ltd.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Pacific Star Network Limited 22.28 0.65 5.08 29.07
Macquarie Media Limited 22.36 1.91 18.55 41.6
Seven West Media Limited 44.92 1.41 8.24 44.24
Ten Network Holdings Limited 24.56 1 -1.14 0.17
Southern Cross Media Group Limited 27.38 1.31 6.02 18.39
Peer Median 24.56 1.31 6.02 29.07
Best In Class 22.28 1.91 18.55 44.24

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Company Profile

Southern Cross Media Group Ltd. provides radio and television broadcasting services. Its activities include broadcasting of regional free to air commercial TV and radio station across Australia, advertising sales on TV and radio and management of online radio content. The company operates through its segment: Free-to-air broadcasting. The Free to air broadcasting segment consists of the commercial radio, television and online broadcasting business held throughout Australia. Southern Cross Media Group was founded on November 5, 2007 is headquartered in South Melbourne, Australia.

Disclaimer

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