7 Şubat 2013 Perşembe

HURRIYET GAZETECILIK - No major attraction: HOLD

Structural change in the ad market
In the last seven years, the share of online business increased from 0.5% to 15.1% at the expense of the newspaper market, whose share declined to 21% in 2012 from 36% in 2005. We expect a further 5ppt market share loss by 2017. Cutting cost base and building a strong online business is the only way out of this demise.

Only growth to come from online operations
Though we expect Hurriyet’s online ad revenues to increase at a CAGR of 22% over the next five years, Hurriyet’s total ad revenues will increase at an annual rate of 1% due to the drop in print ad revenues. However, increasing share of online revenues will help its EBITDA margin to increase by 3.1ppt to 16.8%, resulting in a CAGR of 5.0% in EBITDA.

No major upside
We initiate on Hurriyet with a TRY0.94 TP, indicating 1% downside potential. We derive our TP using a blended valuation, assigning 50:50 weights to DCF and peer comparable valuations. Downside risks to our estimates are worse-than-expected performance of online operations and depreciation of TRY while the opposites offer upside potential.
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