Fairfax - Limited downside from here

FXJ’s share price is trading at the bottom-end of our valuation and we see limited downside at these levels. With the recent planned demerger of Domain, FXJ’s share price has broken outside its core trading range of $0.80-$0.95. On a sum of the parts basis, we value FXJ at $1.40 per share. The current share price of $0.95 appears well under-pinned & fails to reflect any additional wins in its transition to a new world organization. 

"At these levels, FXJ is a likely acquisition candidate"

We value total Domain operations at $2.4 billion. Whilst property listings have been weak for the last 12 months, we are anticipating an improvement in the near-to-medium term. With price increases, increasing premium listings penetration & possibly improving national footprint, all bodes well for upgrades to Domain’s earnings down-the-track. 

One day print advertising will stabilize. We await the day there is a moderation in the decline of print advertising (to c.1-2%), but it is not likely in the next 6 (or 12 mths).