Venture Advisory September 2017 report: Markets and company updates

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Venture Advisory September 2017 report: Markets and company updates

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Venture Advisory September 2017 report: Markets and company updates
Venture Advisory monthly report: Markets and company updates

 Industry news

In September 2017, the Australian information technology sector [AXIJ] was slightly down 0.6% while the telco sector [AXTJ] experienced a decline of 4.7%. Both the All Ordinaries [AORD] and ASX 200 [AXJO] were down 0.5% and 0.6%, respectively

Monthly wrap up

Share price performance and valuations

September’s best and worst performers:
  • Technology – Following the merger between Afterpay and Touchcorp, the newly formed Afterpay Touch’s share price has continued to perform well and traded up 14% in September following the announcement of several high-profile partnerships
  • Media – Out-of-Home advertisers APN Outdoor Group and oOh!media both traded up throughout September up 12% and 5%, respectively. Following the passage of media ownership reforms Southern Cross Media saw its share price fall 9% for the month
  • Telco and ICT – After issuing a statement disavowing a rumoured sale process, communications and IT service provider Speedcast International saw its share price close up 9% for the month. TPG Telecom saw its share price trade down 11% after the company lifted profits but warned of margin pressures as fixed line customers switch to NBN

M&A and investment activity

The market saw several transactions announced:
  • Webjet completed the acquisition of JacTravel from Vitruvian Partners for GBP190m
  • Wisetech announced the acquisitions of two leading global rate management solution providers Cargoguide and CargoSphere based in the Netherlands and the U.S., respectively
  • Softbank’s Vision Fund, the world’s largest private equity fund, has invested $1bn in Fanatics. Fanatics is a Florida-based online sports firm that handles the merchandise sales of all major U.S. based professional sports leagues
  • Deliveroo, the UK-based food delivery startup that brings high-end restaurant food to homes, has raised US$385m in a new funding round led by US firms T. Rowe Price and Fidelity
  • Fairfax announced its shareholders will vote on the proposed separation of Domain Holdings into a standalone ASX listed entity
  • Superloop continued its push into fixed wireless with the acquisition of Adelaide based NuSkope

Technology Sector Highlights

SEPTEMBER SHARE PRICE PERFORMANCE (BEST AND WORST) — TECH

INDUSTRY UPDATE – TECHNOLOGY

Date Company Comments (all growth figures are based on pcp)
1-Sep-17 Webjet Completed acquisition of JacTravel from a fund of Vitruvian Partners LLP and management for GBP190m
7-Sep-17 Mobile Embrace Launched AddGlu, a predictive customer acquisition platform for digital performance marketing. The highly scalable proprietary technology platform uses predictive analytics to present consumers with product and service offerings of the greatest personal value to them. The company expects AddGlu to be a key organic revenue driver for the company
12-Sep-17 Wisetech Global Announced acquisition of two leading global rate management solution providers:
  • Cargoguide, Netherlands-based, leading provider of global air freight rate management solutions for A$6.9m
  • CargoSphere, US-based, leading provider of global ocean freight rate management solutions for A$11.5m
These transactions are in line with the company's stated strategy of accelerating long-term organic growth through small, targeted, valuable acquisitions across new geographies and adjacencies
13-Sep-17 Afterpay Touch Group Partnered with Jetstar to offer the Afterpay services to its customers. Afterpay will be available on Jetstar.com initially for domestic flights. The partnership marks Afterpay's first buy now, pay later venture in the travel industry
19-Sep-17 Integrated Research Signed an agreement with Cisco to join its SolutionsPlus Program, that will enable a streamlined ordering process for IR Prognosis solutions through the Cisco Global Price List (GPL) and provide sales compensation for the Cisco channel partners and sales teams
22-Sep-17 ASG Group Ltd Acquired SMS Management & Technology for A$120m through a scheme implementation agreement of A$1.698 per share and A$0.102 special dividend. The transaction had EV/ LTM revenue of 0.4x, EV/LTM EBITDA of 14.4x and EV/LTM EBIT of 17.4x
25-Sep-17 IRESS IRESS invested A$2m as a performance-linked investment in Lucsan, a Australian-owned RegTech and data analytics company. The transaction is expected to accelerate the application of RegTech in the financial services landscape
28-Sep-17 OFX Announced appointment of Mike Kennedy to the company's Global Executive Team as President, North America. Mike will be responsible for overseeing OFX’s North American operations and accelerating the delivery of OFX’s North America growth strategy

SOURCE: Factset, AFR, ASX Company Announcements, Company websites

Note: Data collected 30 September 2017. See Appendix One for ticker and company details

Media Sector Highlights

SEPTEMBER SHARE PRICE PERFORMANCE (BEST AND WORST) — MEDIA

INDUSTRY UPDATE – MEDIA

Date Company Comments (all growth figures are based on pcp)
7-Sep-17 Village Roadshow Announced that its Theme Parks division is proposing the sale and long term leaseback of 154 hectares of iconic freehold land on the Gold Coast. The proceeds of the sale will initially be used to reduce the company's debt levels and progress towards its growth strategies
7-Sep-17 APN Outdoor Group Finalised a new A$200m Syndicated Finance Facility. The facility is being provided by Commonwealth Bank of Australia, Westpac Banking Corporation and Bank of China and comprises a A$125m three-year tranche and a A$75m five-year tranche
15-Sep-17 Nine Entertainment Completed the sale of Willoughby, Sydney site to Euro Properties, a Hong Kong based property investor for A$134m on an after-tax basis
21-Sep-17 Fairfax Media Announced a trading results for FY18 YTD ahead of the potential lodgement of the Domain Separation Scheme Booklet:
  • FY18 YTD overall group revenues are down 4-5% as compared to last year, across with Metro Media (down 11%), Australian Community Media (down 10%), Macquarie Media (down 4%) partially offset by Domain digital revenue (up 22%)
  • For FY18, Domain’s costs are expected to increase approximately 13% from FY17’s $206m"
22-Sep-17 Fairfax Media Fairfax Media's subsidiary Domain Group is preparing to demerge its online property subsidiary (Domain Group) in a partial stock market listing. The company received court approval by an Australian court to hold a shareholder meeting to vote on the separation and listing of Domain Holdings
22-Sep-17 Seven West Media Seven West Media and Prime Media Group disclosed they held takeover discussion which ended without a deal, a faltering start to likely media consolidation brought on by deregulation
22-Sep-17 oOh!media Announced the following appointments to support growth strategy:
  • Tony Faure to replace Michael Anderson as Chairman of oOh!media
  • Joanne Crewes joins Board as an independent non-executive Director
  • Debbie Goodin appointed as Lead Independent Director
  • Michael Anderson remains on Board as an independent non-executive Director

SOURCE: Factset, AFR, ASX Company Announcements, Company websites

Note: Data collected 30 September 2017. See Appendix One for ticker and company details

 

Telco and ICT Sector Highlights

SEPTEMBER SHARE PRICE PERFORMANCE (BEST AND WORST) — TELCO

INDUSTRY UPDATE – TELCO

Date Company Comments (all growth figures are based on pcp)
4-Sep-17 Macquarie Telecom Group Entered into a 3-year agreement with Covata for the Macquarie Government division to continue to resell Covata’s SafeShare secure collaboration solution to government users. The company currently offers Covata’s Safe Share product either as a dedicated or shared hosted service under its SIGBOX brand to 23 government departments
6-Sep-17 Spark New Zealand Spark has expanded its 4.5G service to Cromwell, in the Otago region. The launch of 4.5G in Cromwell follows other single-tower deployments covering limited areas in the Christchurch CBD, along with the activation of a cluster of five towers in Queenstown, making a total of 10 sites
7-Sep-17 Macquarie Telecom Group Launched software-defined wide area networking service, in partnership with US SD-WAN specialist Velocloud. The new offering promises multi-path and multi-carrier routing in software over the top of existing network infrastructure, with 'dynamic packet routing' enabling data and network functions to be carried over a mix of links ranging from NBN or private fixed connections to 4G or microwave
11-Sep-17 Superloop Acquired NuSkope and its associated entities RA-WIFI and RA-ADSL to expand its fixed wireless capability. The acquisition accelerates the company's ability to significantly expand fixed wireless coverage in Adelaide and surrounding areas which neatly compliments BigAir wireless network footprint
13-Sep-17 Melbourne IT Announced appointment of Fraser Bearsley as Melbourne IT CFO, following the resignation of Stuart Bland. Fraser has varied background including transaction advisory work and a strong pedigree in accounting and finance gained at Ernst & Young
19-Sep-17 TPG Telecom Reported FY17 revenue of A$2,490.7m (up 4% YoY), EBITDA of A$890.8m (up 5% YoY) and A$413.8m (up 9% YoY). The results include A$35.3m post-tax profit realised on the sale of equity investments and A$4.9m post-tax non-recurring revenue earned by the Group’s Consumer Segment. The company also declared a final dividend of A$0.02 per share
21-Sep-17 Superloop Completed a fully underwritten placement of 8.9m new fully paid ordinary shares to raise A$20m of additional capital. The Placement was offered to institutional and sophisticated investors at A$2.25 per share. The funds raised from the placement will be used to provide funding support for further customer-led network expansion, possible strategic acquisitions and balance sheet flexibility for future strategic growth opportunities

SOURCE: Factset, AFR, ASX Company Announcements, Company websites

Note: Data collected 30 September 2017. See Appendix One for ticker and company details

Appendix One

Appendix One

TECHNOLOGY MEDIA TELECO & ICT
3P Learning Ltd 3PL APN Outdoor Group Ltd APO amaysim Australia Ltd AYS
Aconex Ltd ACX Asia Pacific Digital Ltd DIG Bulletproof Group Ltd BPF
Afterpay Touch Group APT Carsales.com Ltd CAR Chorus Ltd CNU
Altium Ltd ALU Event Hospitality & Entertainment Ltd EVT DWS Group DWS
ASG Group Ltd ASZ Fairfax Media Ltd FXJ Inabox Group Ltd IAB
Bravura Solutions BVS GTN Group GTN Macquarie Telecom Group Ltd MAQ
Computershare Ltd CPU HT&E HT1 Megaport Ltd MP1
Crowd Mobile Ltd CM8 iCar Asia Ltd ICQ Melbourne IT Ltd MLB
Data#3 Ltd DTL Macquarie Media Ltd MRN MNF Group Ltd MNF
ELMO Software ELO Nine Entertainment Co Holdings Ltd NEC NEXTDC Ltd NXT
GBST Holdings Ltd GBT News Corporation NWS Singapore Telecommunications Ltd Z74
Hansen Technologies Ltd HSN oOh!media Ltd OML Speedcast International Ltd SDA
Infomedia Ltd IFM Pacific Star Network Ltd PNW Spark New Zealand Ltd SPK
Integrated Research Ltd IRI Prime Media Group Ltd PRT Superloop Ltd SLC
IRESS Ltd IRE QMS Media QMS Telstra Corporation Ltd TLS
iSelect Ltd ISU REA Group Ltd REA TPG Telecom Ltd TPM
iSentia Group Ltd ISD SEEK Ltd SEK Over the Wire Holdings Ltd OTW
Kogan.com Ltd KGN Southern Cross Media Group Ltd SXL Vocus Group Ltd VOC
OFX Ltd OFX Sky Network Television Ltd SKT
Mobile Embrace Ltd MBE Seven West Media Ltd SWM
MYOB Group Ltd MYO WPP AUNZ WPP
Reckon Ltd RKN Village Roadshow Ltd VRL
Retech Technology RTE
SMS Management & Technology Ltd SMX
Technology One Ltd TNE
Trade Me Group Ltd TME
Webjet Ltd WEB
Wisetech Global Ltd WTC
Xero Ltd XRO
zipMoney ZML