APN Outdoor: Making money from traffic jams
APN Outdoor (APO) looks to have continued long-term growth. Outdoor advertising spend continues to increase, with a ten-year annual growth rate of 6.7%, against just 2% for ad spend overall. Australian outdoor advertising is 5.6% of ad spend, behind the global average of 7.5%. Last year saw a particularly strong 17% growth in outdoor ad spend, with this growth continuing into 2016. APO is continuing to improve on its 30% market share in Australia and New Zealand.
Outdoor is emerging as a strong alternative to newspaper and magazine advertising, as these traditional methods rapidly lose readers. With more Australians settling in metropolitan areas congestion has also increased, resulting in more eyeballs for outdoor advertising.
Glennon Capital
ASX:GC1, ASX:CMI
Digitising their inventory also continues to provide significant benefits going forward and involves converting static billboards to digital screens able to display more inventory with more flexibility. Payback periods range from 18 months to three years with revenue uplifts of 4 times and EBITDA uplifts of close to 8 times for a given conversion. For the second half of 2015 APO had only 26% of revenue sourced through digital, though this is increasing quickly.
EBITDA is forecast to continue growing faster than revenue, with margins continuing to improve. Digitisation continues to be the primary driver for an EPS growth rate in the mid-teens over the next few years. While the stock has risen from $3 in August to $6.50 now the valuation still appears reasonable in the context of strong growth.
(Alex Shevelev, Portfolio Manager)
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Glennon Capital was founded in 2008 by Michael Glennon. Previously, Michael worked with some of the best institutional small company fund managers in Australia. In 2007, he received the IMCA Money Management Fund Manager of the Year (Small Cap) Award. Michael founded Glennon Capital to offer specialist small company investment management to high net worth individuals and family offices, as well as through selective platforms for clients with less than $1 million to invest in our portfolios.
Today, our flagship fund Glennon Small Companies Limited (GC1) opens up the investment opportunity for all. GC1’s Initial Public Offering was completed in August 2015 and is now a listed investment company that is traded on the Australian Stock Exchange (ASX).
We are proud to be recognised for co-investing with clients in all portfolios – an important feature which ensures that our values and principles are aligned with those of our clients.
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Glennon Capital
Fund Manager
ASX:GC1, ASX:CMI
Glennon Capital was founded in 2008 by Michael Glennon. Previously, Michael worked with some of the best institutional small company fund managers in Australia. In 2007, he received the IMCA Money Management Fund Manager of the Year (Small Cap)...
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Glennon Capital
Fund Manager
ASX:GC1, ASX:CMI
Glennon Capital was founded in 2008 by Michael Glennon. Previously, Michael worked with some of the best institutional small company fund managers in Australia. In 2007, he received the IMCA Money Management Fund Manager of the Year (Small Cap)...
Expertise
No areas of expertise
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