MCU Mitchell communications group -Its time has arrived

[ratkin]

The rat has bought these today after watching them closely for sometime.
I hate selling so choose my investments very carefully , this one has the makings of a great buy.

Recently announced a profit upgrade of at least 10% and today reached agreement with cricket australia to manage all the billboards etc at the test match grounds.
Sentiment is about to favour this stock , here is a recent article which shows some of the potential

http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=1574F7DA-17A4-1130-F54E281594A0330A

Note j.b were , ubs and merrill lynch rate this a buy with targets between 1.50 and 1.75 , substantially higher than its current 1.20

[ratkin]

NEWLY formed media agency Mitchell Communication Group has upgraded its full year profit by as much as 20 per cent.

Signalling strong growth in the advertising market, the company said yesterday its forecasted net profit of $7.31 million was expected to be between 10 per cent and 20 per cent better for the year to June 30, 2007.

A previous profit upgrade late last month said net profit would be "at least" 10 per cent higher.

Mitchell Communication Group was formed in April through the merger of online ad agency emitch and media planning and buying firm Mitchell & Partners.

Analysts said it appeared the company, which is in the process of striking a joint venture with the Asian arm of media agency MPG, was enjoying growth on a number of advertising fronts.

Last month, Free TV Australia revealed the free-to-air TV ad market had a 6.6 per cent growth spurt to $1.74 billion during the June half including capital cities which saw a 6 per cent increase to $1.34 billion.

More recently, a PricewaterhouseCoopers report showed that internet advertising spend enjoyed double-digit growth in 2006, a trend that's expected to continue through to 2011, when the advertising market is expected to swell to $13.5 billion.

The report also showed a resurgence in "out-of-home" advertising.

Mitchell Communication Group is exposed to all of these segments of the advertising market.

Following emitch's $97.5 million takeover of Mitchell & Partners the Mitchell family, led by Harold Mitchell, emerged with a 45.9 per cent stake in the business.

According to an initial profit upgrade notice lodged with the exchange on July 27, the Mitchell family stands to receive an additional payment under the deal, if earnings before interest and tax of the acquired businesses exceed $11.5 million for fiscal 2007.

Shares in Mitchell Communications Group fell 3 to $1.19 yesterday

[ratkin]

Another great announcement today, setting up Digital artists , to manage online video advertising etc.

[ratkin]

Cracking good result today with plenty of growth to come.

Only downside is they now have to pay the Mitchells more money. A cynic might argue that the profit levels were set too low in the prospectus, good work by the Michells anyhow.

Of more importance is how well and quickly the new group has got up and running , future looks very bright, market seems to like the announcement so far with the stock up about 10% today

[steve fleming]

well it may be a good company at the moment, but after reading an interview on the new CEO Stuart Mitchell last month, i vowed never to invest in it.

If ever there was a candiate to take the title of spoilt rich kid who destroys his dads business it would be him.

All the industry sources in the article pretty much said he was dumb and lazy - the funny thing was Stuart pretty much agreed with the assessment!

Bring back Lee Stephens i say.

[ratkin]

Very poisitive speeches at the AGM . looks as though profits are going to exceed expectations , dividend ratio is to be increased from 45-60
%

Industry as a whole performing very well and MCU outperforming the industry. Digital media in particular is growing rapidly. They are forecasting very strong advertising conditions for 2008 so it looks like all systems go

[ratkin]

That isnt quite correct. That 7% forecast was not for the company.

They are predicting that the whole advertising industry will grow by 7% in 2008 and that digital will grow by a massive 50% !!

[ratkin]

You are still not getting it right . The 7% has nothing to do with Michell communications group.

7% is just their prediction for the growth in australian advertising for 2008. It is not a prediction for the growth of the company

[thereslifeafter87]

No I do get it. The media business is mature, and all MCU does is clip the ticket on the way through. If their clients spend 7% more then MCU makes 7% more. In order for MCU to grow the business beyond market rates of growth they either have to poach clients from other agencies, or get them to spend more than the industry norm. You cant bank on either happening.

The other half of the business is in creating campaigns, which is growing by 50%. Much easier to get new clients and to get existing ones to spend more on internet advertising (although usually at the expense of the other advertising methods).

So one high growth business, one low growth. The exact figures may vary (and why havent they disclosed them?) but the theory is the same.

7% annually is pretty high growth for an industry as a whole when GDP growth is 4-5%.

Advertising companies can poach staff with contacts from other agencies to win new clients. This fuels growth also. The picture isn't as bleak as you are painting it.

[Footsie]

I think MCU is undervalued..

I believe they can pull EPS of 0.078c in FY08 .... thats a p.e of 15x

Most media companies trade on p/e around 20x


I wouldn't call them cheap, but with the potential to upgrade earnings again a re-rating by analysts is high.


Additinoally the average broker target is 1.65 (ish)

[ratkin]

7% growth is very good for advertising , it has been humming along at 11% in first half and MCU have stated their earnings are going to come in at the upper end of expectations , and as research reports indicate a target price of 1.60 plus then to come in at top end of expectations is very good..

[ratkin]

According to Merrill lynch mcu has a p/e of 16 and the dividend yield will be around 3.7% They have a price target of 1.65

[biker]

I'm having a crack at these. 67c is starting to look a bit cheap (not withstanding current conditions) and the buyback should limit the downside in the mean time. ( I know Phaedrus, I know!)

[Phaedrus]

Biker, I won't say a word!

http://i602.photobucket.com/albums/tt102/PhaedrusPB/MCUa.gif

[STRAT]

Biker, I won't say a word!

Phaedrus,
Thats about a thousand words as the saying goes :D

[Footsie]

MCU has broken its downtrend that has been in place since December

It has cut the 65day EMA which it has held to to date
broken the downtrend line
RSI has turned positive.

I have been following MCU for sometime for fundamental reasons looking for entry.
Now I have one.

DISC stock held

[ratkin]

Well its three years since the thread started and the credit crunch has seen this one all over the place , creating some great buying opportunities along the way, have dipped my toes in several times over the last few years and the dividend yield on those cheaply bought shares is a wonder to behold.

Not sure whats occuring at the moment but the shareprice seems unusually strong in the last week or so especially when you consider the overall market weakness. Does anybody have any idea whats causing this sudden optimism? . Long overdue imo , could never understand why these shares have been so out of favour , a well managed company with a great dividend yield.

Hope your still holding Biker

[h2so4]

Well its three years since the thread started and the credit crunch has seen this one all over the place , creating some great buying opportunities along the way, have dipped my toes in several times over the last few years and the dividend yield on those cheaply bought shares is a wonder to behold.

Not sure whats occuring at the moment but the shareprice seems unusually strong in the last week or so especially when you consider the overall market weakness. Does anybody have any idea whats causing this sudden optimism? . Long overdue imo , could never understand why these shares have been so out of favour , a well managed company with a great dividend yield.

Hope your still holding Biker
Struth ratkin, where did this gem come from, havent heard of it until today.

[ratkin]

Trading halt and an offer to buy the company for 1.20 a share , plus shareholders recieve a full dividend.

Not enough imo , and could be just the start.