*LIBYA COULD DOUBLE OIL OUTPUT WITHIN WEEKS AFTER POLITICAL PACT
Ströer went public in 2010 as a Germany-based operator of billboards, with the founders Dirk Ströer and Udo Müller floating 47.8% of the company’s shares – they still hold about 42% of the shares today. The business was steadily growing, but perhaps a bit boring. The stock price languished. At the end of 2012, it was down 40% from its IPO, and trading at 7x EV / EBITDA. But something big changed in 2013. Ströer unveiled a “digital” strategy based on three pillars – acquiring a group of online businesses in Turkey and Poland, buying a couple of online ad exchanges, and buying a few online advertising businesses from Dirk Ströer and Udo Müller, who is still the CEO of Ströer. This all seemed to make sense – old world advertising meeting the new, Ströer striving to become number one in Germany in online and offline, a bold company that grasped what others weren’t yet seeing…
Most of the world seems to think Ströer’s move into online has been a smashing success. Revenues, EBITDA, and net income are all up substantially since the end of 2012 – and not coincidentally – so is the stock price. At around €54 per share, Ströer now trades at 19.77x EV / EBITDA.
Ströer has since acquired content companies, Deutsche Telekom’s online portal, an education software company, mobile advertising companies, a statistical analysis company, gaming companies, a company aiming to make the yellow pages obsolete, and a location-based advertising firm. Since 2012, Ströer has bought stakes in at least 29 companies, spending what we calculate is €142 million in cash, and increasing the share count by 32%. Ströer says its digital businesses grew organically by 34.3% in 2014, and 23.5% in 2015. Why should anybody be skeptical?
Well, it turns out that Ströer’s claimed digital organic growth rates are way off from what we can calculate. We see Digital organic growth rates of only 2.2% in 2014, and 2.5% (using adjustments we believe are more reflective of the business) to 16.4% (using the company’s methodology) in 2015. Maybe Ströer’s digital foray makes as much sense as wanting to be sucked into your computer in order to get physical media implants. The billboard business strikes us as a real estate business. It is our view that much of the business revolves around knowing commuting patterns and neighborhood demographics, dealing with planning departments, negotiating leases with property owners, schmoozing with government employees, managing construction, securing adequate insurance, detecting structural problems and managing maintenance, working with industrial printers, managing logistics, etc., etc. Billboards seem to us like a fairly old school, hard-nosed business.
Perhaps there’s a good reason why Ströer seems unique among OOH advertising companies in aggressively pursuing online business. Why is it that large U.S. OOH companies with relatively easy access to Silicon Valley seemingly haven’t caught onto Ströer’s opportunity set? Probably for the same reason Sergei Brin, Larry Page, Jerry Yang, and Mark Zuckerberg were not in commercial real estate before founding online marketing powerhouses – there seems to be little overlap.
When we scratch the surface at Ströer, we see a company that to us appears far less successful in online than the market seems to think. Moreover, we see a company whose insiders have spun a great story, but with seemingly little substance; and, while telling the story, have engaged in more highly questionable self-dealing than we’ve ever seen outside of a Chinese company. That’s why we’re short Ströer.
14:16:27 RTRS - GERMAN NUCLEAR COMMISSION WANTS OPERATORS TO PAY ABOUT 24 BLN EUROS INTO FUND FOR FINAL AND INTERIM STORAGE FOR NUCLEAR PHASEOUT, ONLY A MINORITY OF COMMISSION MEMBERS STILL WANTS MORE THAN 26 BLN EUROS - SOURCES EBKG.DE EONGn.DE RWEG.DE
Fnac announces that it has acquired from a number of institutional investors, in aggregate, 29,586,061 Darty Shares, representing approximately 5.59 per cent. of the ordinary share capital of Darty in issue on the date of this announcement. The highest price paid per Darty Share was 153 pence.
We forecast relatively stable wireline trends, with high-speed broadband demand continuing to rise and regulation generally still favourable, which may be a relief for BT (Outperform, European Focus List stock) and LBTY
(Outperform) after a year so far dominated by regulatory and M&A news flow. Line loss trends at TI (Neutral) and TDC (Outperform) remain in the balance.
Mobile is more in a state of flux – we expect a continuation of the H2 15 trend of convergence between markets, with some of the traditionally worst mobile markets recovering (Denmark, Spain, Italy) and some of the traditionally best
mobile markets worsening (Sweden, Norway, the Netherlands). This trend has scope to lead to surprises in Q1 16 results vs. consensus at the stock level, including a) positive: TDC (Outperform) and Telefonica (Neutral), and b)
Negative: Tele2 (Underperform), Telia (Neutral), Telenor (Underperform) and KPN (Neutral). France could also be impacted by the short-term price cutting seen during Q1.
These mixed mobile trends would confirm that the outlook for European mobile has slipped, with 4G mobile data growth slowing (largely a base effect from rising 4G adoption), pricing discipline slipping in some previously healthy markets and the hopes for mobile market repair from 4-to-3 deals continuing to fade. With one of the legs of the consensus sector bull-case weakened, the point of maximum bullishness for the sector has probably already passed.
For some of our companies, we update forecasts ahead of Q1 results. We downgrade Numericable to Neutral (Outperform) with a new TP of €35 (€43). Other TP changes incldue Bouygues €35 (€34) and Sunrise SFr65 (SFr 57).
shipping company Hapag-Lloyd plans major merger
The Hamburg shipping company Hapag-Lloyd will merge with the Arabian competitor United Arab Shipping Company (UASC). The secret negotiations between the two sides are close to a conclusion. The reported manager magazin in its new edition (publication date: April 22). Hapag-Lloyd wanted to make available on request a comment.
Both companies expect the merger of more market power and therefore better prospects in the ongoing shipping crisis. Hapag-Lloyd is currently the sixth largest container shipping company in the world, UASC ranks tenth. Together, they could catch up to fourth.
UASC, headquartered in Dubai is predominantly Arab SWFs. The principal owner of Hapag-Lloyd, the Chilean Quiñenco Group, the logistics entrepreneur Klaus-Michael Kuehne and the city of Hamburg.
Negotiator of the Hamburg Senate should have already signaled their agreement, provided that the headquarters of the combined company is based in Hamburg. The Arab owner of UASC can expect a share of around one third of the merged company.