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雷达卡
13 February 2009
Italian publishing
Tougher and tougher
Alessandro Bai-Badino
Research Analyst
(39) 0286379 850
alessandro.bajbadino@db.com
Deterioration of Italian adspend market: cutting 2008-10 estimates
Recent ad data shows deterioration in the Italian ad market, with the press the
most affected. Consequently, we are cutting our 2008-10 numbers across the
board (09E EPS cuts: Espresso by 43%, RCS by 86% and Mondadori by 2.2%) in
order to reflect the impact of increased pressure on revenues and margins. We
maintain Sell on Espresso with a new TP of E0.8/sh (previously E1.1/sh) and Hold
on RCS with a TP of E0.85/sh. Mondadori is our only Buy, with a TP of E4.6/sh.
Deutsche Bank AG/London
All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local
exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche
Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm
may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision. Independent, third-party research (IR) on certain companies covered by DBSI's research
is available to customers of DBSI in the United States at no cost. Customers can access IR at
http://gm.db.com/IndependentResearch or by calling 1-877-208-6300. DISCLOSURES AND ANALYST CERTIFICATIONS ARE
LOCATED IN APPENDIX 1.
Forecast change
Top picks
Gruppo L'Espresso (ESPI.MI),EUR0.90 Sell
Mondadori (MOED.MI),EUR3.28 Buy
RCS MediaGroup (RCSM.MI),EUR0.71 Hold
Companies featured
Gruppo L'Espresso (ESPI.MI),EUR0.90 Sell
2007A 2008E 2009E
DB EPS (EUR) 0.23 0.13 0.06
P/E (x) 16.1 7.2 15.3
EV/EBITA (x) 10.5 5.9 8.8
Mondadori (MOED.MI),EUR3.28 Buy
2007A 2008E 2009E
DB EPS (EUR) 0.46 0.41 0.34
P/E (x) 15.6 8.0 9.7
EV/EBITA (x) 10.0 5.7 7.1
RCS MediaGroup (RCSM.MI),EUR0.71 Hold
2007A 2008E 2009E
DB EPS (EUR) 0.28 0.03 0.01
P/E (x) 13.9 21.7 84.5
EV/EBITA (x) 14.8 10.0 14.1
Global Markets Research Company
DBe Italian adspend: -2.2% YoY in FY08 and -6% YoY in FY09
During Jan-Nov 2008, the Italian adv mkt contracted by 1.6% YoY, with a 13.1%
YoY decline in Nov ‘08 (source: Nielsen Media Research). Therefore, we estimate
the total advertising market will end the year at -2.2% YoY after registering a 9.0%
drop in Q4. For FY09, we expect Italian adspend to decline by a further 6% YoY,
with the press (newspapers and magazines) the most affected media segment,
registering a 9.2% decline. In 2010, we expect the market to recover +2% YoY,
but with press up only 0.5% YoY. Among the major listed Italian media groups,
Espresso has the highest exposure to advertising, which accounts for 60% of its
revenues, while Mondadori has the lowest (27% of revenues).
Recession could accelerate the declining trend in circulation and add-ons
During the last two economic downturns, Italy showed sharp declines in
circulation. We believe that this decline will continue in the coming years, with the
current recession accelerating the trend. The recent decision by Audipress (the
Italian independent group certifying press readership data) not to publish 2009
figures could put further pressure on press advertising prices. We estimate that
the >17% decline in the add-on market in 2007 will be seen again in 2008, and we
assume a further decline of 10% in 2009.
We expect only Mondadori (MN) to pay a dividend in FY08-09
MN has a robust balance sheet at 2x 08E net debt/EBITDA. For FY08, we forecast
a stable dividend of E0.35/sh, with a dividend yield of >10%. We believe that
Mondadori’s dividend policy can be sustained in the coming years. For Espresso,
after the Chairman’s decision not to distribute a dividend with FY08 results, we
assume that no dividend will be paid for 2009 either (DBe 2009EPS -54% YoY).
We expect RCS also not to distribute a dividend given a rise in net debt (E1.1bn at
end-FY08) and 2008E and 2009E net debt/EBITDA ratios of 4.4x and 5.2x,
respectively. (See page 5 for changes to target price and EPS.)
Mondadori is our best pick and our only Buy
We continue to use DCF as our principal valuation methodology, in line with our
valuation approach for all European newspaper stocks. Our valuations for the three
Italian publishers incorporate estimates until 2012 and a terminal growth rate
of -1.0%. Our WACC reflects a beta of 1.1 (reflecting the industry’s broad
exposure to the economy), a risk-free rate of 4.6%, and an equity risk premium of
5.0% (in line with the sector). Risks that could affect the entire sector include
adspend, circulation, add-ons, paper costs, consumer demand trends and peer
competitiveness. Company-specific risks and valuations are outlined in each
company section later in the report.
Table of Contents
Executive summary ........................................................................... 3
Outlook ....................................................................................................................................3
Valuation ..................................................................................................................................3
Risks ........................................................................................................................................5
Industry drivers: focus on advertising ............................................. 6
Today worse than 1993-94 and 2001-03...................................................................................6
DBe FY08 Italian adspend: -2.2% YoY.......................................................................................8
DBe for Italian adspend: FY09 -6% YoY, FY10 +2% YoY ..........................................................9
DBe for add-on sales: -17.1% YoY in FY08 and -8.4% YoY in FY09 ........................................10
Gruppo L'Espresso .......................................................................... 12
Cutting our 2008-10 estimates again ......................................................................................14
FY08 radio audience: …and the loser is Espresso ..................................................................15
FY08 results preview...............................................................................................................16
Valuation ................................................................................................................................17
Risks ......................................................................................................................................18
Mondadori........................................................................................ 20
Updating our 2008-2010 estimates.........................................................................................22
FY 2008 results preview..........................................................................................................24
Valuation ................................................................................................................................25
Risks ......................................................................................................................................26
RCS MediaGroup............................................................................. 28
2008-2010 estimates cut on 9 February .................................................................................30
Valuation ................................................................................................................................31
Risks ......................................................................................................................................33
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