By Jason Fittler
Fairfax media (FXJ) is one of Australia's leading media companies, being Australia's largest integrated metro, regional and rural print and digital media business. They publish 240 regional, rural and community publications, have a significant presence in New Zealand, an agricultural publishing business in the US, 9 radio licenses in Queensland and South Australia and metro newspapers in Sydney, Melbourne and Canberra.
The media sector has seen a large fall in revenue over the past year; Fairfax has seen a decline of 22% in metro newspaper ad revenue and 11% in the regional areas. With a total fall in revenue of 13%. So why buy this company?
Fairfax has recently improved it debts position through asset sales and capital raising. They do not have any debt due until 2011 and are not likely to breach in capital positions in the coming years due to the cash now available. The company is trading at a discount when compared to its weaker overseas peers, it has an ongoing debt reduction strategy in place and we have a forecast dividend growth over the coming 2 years.
This is a Blue Chip stock in an unpopular sector although the road ahead is not as smooth as we would like, long term this will be a great buy.
The stock is currently trading at $1.00, while our price target is $1.40. That is enough incentive to buy this stock.
If you would like more information on Fairfax Media please give us a call on (07) 4771 4577.