Venture Advisory Monthly Wrap - June 2017

Key Takeaways

SMS Management & Technology entered into a Scheme Implementation Agreement with ASG Group to acquire the IT Services provider

REA Group acquired a majority stake in Smartline, a mortgage broking franchise business for A$67m

KKR has made a preliminary non-binding offer to acquire Vocus Group

Ecommerce giant Amazon entered the supermarket industry with its acquisition of Wholefoods

Alibaba and Ant Financial have invested US$1bn in China-based food delivery company Ele.me

Telco and ICT Monthly Wrap

Vodafone launched legal action against the ACCC, following its recent decision to restrict competitor networks from using Telstra's infrastructure to provide domestic roaming services. Vodafone believes Australian mobile users will continue to pay more and receive poor coverage in regional areas, due to this decision

Telco and ICT Best and Worst Monthly performers

Vocus Group’s share price rose 20% following a preliminary bid from KKR. Bulletproof Group was down 35% for the month

The 5 best and worst performers for the month of June 2017 were as follows:

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Key Company Announcements

Telstra (5 Jun 17) completed acquisition of Company85 for an undisclosed amount

Vocus Group (7 Jun 17) received a preliminary and non-binding proposal from KKR to acquire 100% of its shares at A$3.5 per share, valuing the company at A$2.2bn

Spark New Zealand (13 Jun 17) acquired Ubiquity, a marketing automation provider as part of its growth strategy for Qrious. The end-to-end marketing expertise of Ubiquity complements the big data analytics software capabilities of Qrious

Speedcast (13 Jun 17) entered into an important strategic partnership with Inmarsat. The agreement positions Inmarsat’s new Fleet Xpress service to be fully integrated with SpeedCast’s existing maritime SIGMA gateway and other Value-Added Services

Spark New Zealand (14 Jun 17) announced that the company is upgrading its core infrastructure with a three-year strategic partnership with Nokia, 7250 Interconnect Router R6 (IXR-R6) to address capacity and embrace architectural, evolution on the path to 5G, ultra-broadband and IoT

Vocus Group (14 Jun 17) reconfirmed its FY17 guidance, expecting revenue to be around A$1.8bn, underlying EBITDA to be between A$365-375m, NPAT to be between A$160-165m and capex to be around A$180-190m

Megaport (28 Jun 17) completed A$27.8m Capital Raising to fund North American and European network-related capital expenditures, ongoing operating costs and new product development initiatives. The capital raising includes fully underwritten institutional placement of A$16.4m and private placement to a US-based investor of A$11.4m

Bulletproof Group(1 Jun 17)

Announced appointment of Paula Kensington as the CFO of the company

Damien Connor was appointed as the joint company secretary following the resignation of Kylie Turner. Damien has been as the company secretary of various ASX-listed companies including Sundance Energy Australia, Archer Exploration and UraniamSA

Melbourne IT (28 Jun 17) announced appointment of Gail Pemberton, as the Chairman of the Board, following the retirement of Simon Jones

Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading telco and ICT stocks at the end of the month is as follows:

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Telecom stocks were trading on an average forward EV / EBITDA of 9.9x and a median forward EV / EBITDA of 8.2x.

Media Monthly Wrap

The Turnbull government announced it will remove licence fees for commercial free-to-air television and radio broadcasters for FY17 as a one-off relief measure. According to Communications Minister Mitch Fifield, the one-off relief measure will save the broadcasting industry A$127m. Permanent financial relief will be provided through the government’s Media Reform package, if passed by the Senate as a whole

Media Best and Worst monthly performers

Prime Media Group was up 23% following revised full-year guidance and a windfall from the government’s decisions to remove FTA license fees for FY17

The 5 best and worst performers for the month of June 2017 were as follows:

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Key Company Announcements

Village Roadshow (13 Jun 17) sold 50% of its stake in Golden Village, Singapore cinema exhibition business to mm2 Asia Ltd for ~A$175m (SG$180m). The proceeds from the sale will be used by the company to reduce its debts, thereby allowing Village Roadshow to pursue its strategic growth opportunities

Seven West Media (14 Jun 17) will launch a fully-owned long-form video catch-up TV digital product and platform

Ten Network Holdings (14 Jun 17) announced the company had entered voluntary administration, appointing KordaMentha to oversee the process. The company also suspended from official quotation following the appointment

Sky Network Television (26 Jun 17) and Vodafone New Zealand terminated the sale and purchase agreement for their proposed merger. They also decided to withdraw the appeal of the Commerce Commission decision regarding the proposed merger

Nine Entertainment (28 Jun 17) - The government’s announced reduction in the licence fee paid by Australia's commercial FTA broadcasters from 3.375% to 0% for FY17 will result in the reduction of licence fees of around A$33m, accrued by the company in FY17 and was to be paid in FY18. The company also revised its FY17 EBITDA guidance to A$200-210m from A$187m and will release its FY17 results in 24 August 2017

Nine Entertainment (19 Jun 17) announced the promotion of Lizzie Young as Content Strategy Director

iCar Asia (29 Jun 17) announced the appointments of Peter Everingham, Richard Kuo and Jamie Olsen to the Board of Directors, following the resignation of Mark Britt and Chris Lobb

Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading media stocks at the end of the month is as follows:

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Media stocks were trading on an average forward EV / EBITDA of 9.3x and a median forward EV / EBITDA of 7.9x.

Technology Monthly Wrap

Technology Best and Worst monthly performers

iSentia Group was up 26% following the appointment of new CFO James Orlando who will oversee the company’s financial management as it looks to grow across Asia-Pacific

The 5 best and worst performers for the month of June 2017 were as follows:

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Key company announcements

Kogan.com (7 Jun 17) signed agreement with Vodafone Hutchison Australia to offer fixed-line NBN services in 2018 as well as mobile broadband plans in 2017. The agreement will help Kogan Mobile, a fast-growing business unit of Kogan.com, to strengthen its position in the market

Hansen Technologies(8 Jun 17) process outsourced services division signed a multi-year agreement with Sperian Energy Corporation that includes the full-range of Hansen Solutions such as billing, transaction management, operations, and financial services for Sperian Energy’s retail operations

Technology One (16 June) announced 1H17 revenue of A$113.9m (up 12.8%)supported by strong growth in Initial Licence fees (up 30%), Annual Licence fees (up 10%) and Cloud Service fees (up 93%). Net profit before tax was A$10.3m (up 9.6%) and net profit after tax was A$8.1m (up 9.5%). The company expects profit growth of 10-15% over the 2017 full year based on the strength of its sales pipeline for the second half

SMS Management & Technology (19 Jun 17) entered into a Scheme Implementation Agreement with ASG Group, under which ASG will acquire 100% of SMS Management & Technology shares for A$1.80 per share cash offer

iSelect (23 Jun 17) entered into a multi-year agreement with Nest Labs. to be the exclusive launch partner for select Nest products in Australia in early FY18. The partnership will strengthen iSelect’s existing business and boost the company’s revenue and earnings. It will also drive additional product innovation across its core Insurance, Energy and Telecom businesses

REA Group (27 Jun 17) entered into an agreement to acquire a majority stake in Smartline, a mortgage broking franchise business for A$67m. REA Group also entered into a strategic mortgage broking partnership with National Australia Bank to create an Australian-first end-to-end digital property search and financing experience

iSentia Group (6 Jun 17) announced appointment of James Orlando as the CFO of the company. James previously served as the CFO of Veda Group

REA Group (22 Jun 17) announced the appointment of Henry Ruiz as CEO of REA Group Asia. Henry is responsible for the group's Asian business, including iProperty Group across South-East Asia and Chinese property site, myfun.com

Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading technology stocks at the end of the month is as follows:

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Technology stocks were trading on an average forward EV / EBITDA of 11.6x and a median forward EV / EBITDA of 11.3x.

Reference stocks

Our reference portfolio is as follows:

Telecom Stocks:

amaysim Australia Ltd. (AYS-AU), Bulletproof Group Limited (BPF-AU), Chorus Limited (CNU-NZ), Inabox Group Ltd. (IAB-AU), Macquarie Telecom Group Limited (MAQ-AU), MNF Group Limited (MNF-AU), Nextdc Limited (NXT-AU), SpeedCast International Ltd (SDA-AU), Superloop Ltd. (SLC-AU), Spark New Zealand Limited (SPK-NZ), Telstra Corporation Limited (TLS-AU), TPG Telecom Limited (TPM-AU), Vocus Group Limited (VOC-AU), Singapore Telecommunications Limited (Z74-SG)

Media Stocks:

APN Outdoor Group Ltd. (APO-AU), Carsales.Com Limited (CAR-AU), Domain Holdings Australia Ltd. (DHG-AU), Asia Pacific Digital Limited (DIG-AU), Event Hospitality & Entertainment Ltd. (EVT-AU), Fairfax Media Limited (FXJ-AU), HT&E Ltd (HT1-AU), iCar Asia Ltd. (ICQ-AU), Macquarie Media Limited (MRN-AU), Nine Entertainment Co. Holdings Pty Ltd. (NEC-AU), News Corporation Shs B Chess Depository Interests repr 1 Sh (NWS-AU), oOh media Ltd (OML-AU), Pacific Star Network Limited (PNW-AU), Prime Media Group Limited (PRT-AU), REA Group Ltd (REA-AU), Seek Limited (SEK-AU), SKY Network Television Limited (SKT-AU), Seven West Media Limited (SWM-AU), Southern Cross Media Group Limited (SXL-AU), Trade Me Group Limited (TME-NZ), Village Roadshow Limited (VRL-AU), WPP AUNZ Limited (WPP-AU)

Tech Stocks:

3P Learning Ltd. (3PL-AU), Aconex Ltd (ACX-AU), Altiumc (ALU-AU), Afterpay Touch Group Ltd. (APT-AU), Appen Ltd. (APX-AU), Big Un Limited (BIG-AU), Bravura Solutions Limited (BVS-AU), Catapult Group International Ltd. (CAT-AU), Citadel Group Ltd. (CGL-AU), Class Ltd. (CL1-AU), Crowd Mobile Limited (CM8-AU), Computershare Limited (CPU-AU), Data#3 Limited. (DTL-AU), DWS Limited (DWS-AU), ELMO Software Ltd. (ELO-AU), GetSwift Ltd. (GSW-AU), Gentrack Group Ltd (GTK-NZ), Hansen Technologies Limited (HSN-AU), Infomedia Ltd (IFM-AU), IRESS Limited (IRE-AU), Integrated Research Limited (IRI-AU), iSentia Group Limited (ISD-AU), Kogan.com Ltd. (KGN-AU), Link Administration Holdings Ltd. (LNK-AU), Impelus Ltd (MBE-AU), Melbourne IT Ltd (MLB-AU), Megaport Ltd. (MP1-AU), MYOB Group Ltd. (MYO-AU), Nearmap Ltd. (NEA-AU), Netwealth Group Ltd. (NWL-AU), Nextdc Limited (NXT-AU), OFX Group Ltd. (OFX-AU), Pro Medicus Limited (PME-AU), Pushpay Holdings Ltd (PPH-NZ), Reckon Limited (RKN-AU), Technology One Limited (TNE-AU), Webjet Limited (WEB-AU), Wisetech Global Ltd. (WTC-AU), Xero Limited (XRO-NZ), Zip Co Ltd. (ZML-AU)