Morgan Bellemitch: Advertising for Top Profit
December 20th 2006 10:51
There is something I like about advertising business: they do not have R&
expenses and do not have Plant & Equipment expenses either. All that comes through the front door is profit. Stay with me for a view on emitch.
The news today, 20 December 2006, is that “Australia’s most influential media buyer, Melbourne’s Harold Mitchell, will mount a push into Asia after announcing the $100 million merger of his advertising company, Mitchell & Partners, with online minnow emitch.”
“The deal reunifies the privately owned group with the online venture it spun off five years ago, and represents a backdoor public listing of Mitchell & Partners.”
“Fresh from finalising recent advertising deals worth $600 million among major Australian media companies, Mr Mitchell said emitch would now chase acquisitions in North and South Asian markets within a six-hour time zone from Australia, as well as competing against global media and advertising business.”
“The Mitchell family, which has a controlling stake of 38 per cent of emitch, will use some of the money to be paid for Mitchell & Partners to maintain its holdings at 40 per cent. Mr Mitchell will become emitch chairman while present chairman Garry Hounsell will move to deputy chairman. Mr Mitchell’s son, Stuart, will continue as chief executive of Mitchell & Partners and emitch chief Lee Stephens will also retain his position.”
“emitch will acquire the 30-year-old media buying business in a deal consisting of cash and shares representing a multiple of 8.65 times earnings before interest and tax (EBIT) for 2007.”
“emitch gross billings of $35 million will swell to $900 million. Billings are the amount of money spent on advertising space and charged to clients.”
This news was published in the online version of The Age under the title “Media men plans Asia push after $100m merger” and was written by Helen Westerman. Click here to open that page.
emitch (ASX: EMI) specialises in the online advertising market, was listed in the stock exchange in June 2000 and since then has created an interesting financial track record.
Having sustained losses in 2001 and 2002 its EPS are now 1.4 cents.
EMI’s current Revenues are $31.8 million, exactly three times 2001’s Revenues. Net Profit is $2.6 million on a margin of 8.1 per cent.
Long Term Debt is non-existing and Shareholders Equity is $14.6 million.
Return on Equity is 17.6 per cent.
EMI’s price is $1.25 and P/E an unbelievable 89.3 times.
Advertising agencies of all kinds can be extremely profitable, partially because, as I mentioned before, they do not have R& and Plant & Equipment expenses, and partially because they can share through commissions in the success of the associated products they promote.
Now that emitch and Mitchell & Partners merged, we will have to see what kind of figures result from that.
End
expenses and do not have Plant & Equipment expenses either. All that comes through the front door is profit. Stay with me for a view on emitch.The news today, 20 December 2006, is that “Australia’s most influential media buyer, Melbourne’s Harold Mitchell, will mount a push into Asia after announcing the $100 million merger of his advertising company, Mitchell & Partners, with online minnow emitch.”
“The deal reunifies the privately owned group with the online venture it spun off five years ago, and represents a backdoor public listing of Mitchell & Partners.”
“Fresh from finalising recent advertising deals worth $600 million among major Australian media companies, Mr Mitchell said emitch would now chase acquisitions in North and South Asian markets within a six-hour time zone from Australia, as well as competing against global media and advertising business.”
“The Mitchell family, which has a controlling stake of 38 per cent of emitch, will use some of the money to be paid for Mitchell & Partners to maintain its holdings at 40 per cent. Mr Mitchell will become emitch chairman while present chairman Garry Hounsell will move to deputy chairman. Mr Mitchell’s son, Stuart, will continue as chief executive of Mitchell & Partners and emitch chief Lee Stephens will also retain his position.”
“emitch will acquire the 30-year-old media buying business in a deal consisting of cash and shares representing a multiple of 8.65 times earnings before interest and tax (EBIT) for 2007.”
“emitch gross billings of $35 million will swell to $900 million. Billings are the amount of money spent on advertising space and charged to clients.”
This news was published in the online version of The Age under the title “Media men plans Asia push after $100m merger” and was written by Helen Westerman. Click here to open that page.
emitch (ASX: EMI) specialises in the online advertising market, was listed in the stock exchange in June 2000 and since then has created an interesting financial track record.
Having sustained losses in 2001 and 2002 its EPS are now 1.4 cents.
EMI’s current Revenues are $31.8 million, exactly three times 2001’s Revenues. Net Profit is $2.6 million on a margin of 8.1 per cent.
Long Term Debt is non-existing and Shareholders Equity is $14.6 million.
Return on Equity is 17.6 per cent.
EMI’s price is $1.25 and P/E an unbelievable 89.3 times.
Advertising agencies of all kinds can be extremely profitable, partially because, as I mentioned before, they do not have R&
and Plant & Equipment expenses, and partially because they can share through commissions in the success of the associated products they promote.Now that emitch and Mitchell & Partners merged, we will have to see what kind of figures result from that.
End
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