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Rcs MediaGroup<br />
Italy/Media Analyser<br />
Rcs MediaGroup (Hold)<br />
Hold<br />
Recommendation unchanged<br />
Share price: EUR<br />
closing price as of 07/05/2012<br />
Target price: EUR<br />
Target Price unchanged<br />
Reuters/Bloomberg<br />
0.69<br />
0.85<br />
RCSM.MI/RCS IM<br />
Market capitalisation (EURm) 522<br />
Current N° of shares (m) 762<br />
Free float 14%<br />
Daily avg. no. trad. sh. 12 mth 348,877<br />
Daily avg. trad. vol. 12 mth (m) 0<br />
Price high 12 mth (EUR) 1.27<br />
Price low 12 mth (EUR) 0.61<br />
Abs. perf. 1 mth -9.68%<br />
Abs. perf. 3 mth -8.60%<br />
Abs. perf. 12 mth -45.42%<br />
Key financials (EUR) 12/11 12/12e 12/13e<br />
Sales (m) 2,075 2,047 2,083<br />
EBITDA (m) 168 199 223<br />
EBITDA margin 8.1% 9.7% 10.7%<br />
EBIT (m) (284) 100 124<br />
EBIT margin nm 4.9% 5.9%<br />
Net Profit (adj.)(m) (180) 38 53<br />
ROCE -9.4% 2.1% 2.6%<br />
Net debt/(cash) (m) 938 869 801<br />
Net Debt/Equity 1.3 1.2 1.0<br />
Debt/EBITDA 5.6 4.4 3.6<br />
Int. cover(EBITDA/Fin. int) 5.4 5.4 6.2<br />
EV/Sales 0.6 0.6 0.6<br />
EV/EBITDA 7.8 6.4 5.4<br />
EV/EBITDA (adj.) 7.3 6.3 5.4<br />
EV/EBIT nm 12.6 9.7<br />
P/E (adj.) nm 14.1 10.1<br />
P/BV 0.8 0.8 0.7<br />
OpFCF yield 29.7% 21.8% 26.9%<br />
Dividend yield 0.0% 4.4% 4.4%<br />
EPS (adj.) (0.23) 0.05 0.07<br />
BVPS 0.84 0.89 0.92<br />
DPS 0.00 0.03 0.03<br />
1.30 vvdsvdvsdy<br />
1.20<br />
1.10<br />
1.00<br />
0.90<br />
0.80<br />
0.70<br />
0.60<br />
Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12<br />
Source: Factset<br />
RCS MEDI<strong>AG</strong>ROUP Stoxx Media (Rebased)<br />
Shareholders: Shareholders' Pact 66%; Pandette fin<br />
8%; Benetton 5%;<br />
Analyst(s):<br />
Andrea Devita, CFA,, Banca Akros<br />
andrea.devita@bancaakros.it<br />
+39 02 4344 4031<br />
Francesco Di Gregorio Banca Akros<br />
francesco.digregorio@bancaakros.it<br />
+39 02 4344 4217<br />
Q1 12 preview: focus on cost-cutting efforts<br />
The facts: RCS will release Q1 2012 results on May 14. We expect declining<br />
sales Y/Y on an organic basis, lower but still positive EBITDA thanks to cost<br />
containment measures, stable debt in the last three months.<br />
Our analysis: In Q1 12, we expect revenues to be down Y/Y in organic terms,<br />
with the reported decline higher due to the de-consolidation of Dada.net (sold in<br />
Apr. 11) and the Yatch&Sail activities disposed of in Q4. Core activities, both in<br />
Italy and Spain, will suffer from the deterioration of the advertising collection and<br />
the structural decline in copies sold. Spain is expected to perform worse than Italy<br />
(according to Infoadex, Spanish adv on daily press fell by 21% in Q1 12 Y/Y vs. -<br />
23% in Q4; this compares with -5% Y/Y drop in the first two months in Italy,<br />
according to NMR).<br />
At the EBITDA level, we don‟t expect the decline in the top-line to<br />
translate into negative figures EBITDA, thanks to significant cost containment<br />
measures: with the Q4 earnings release, RCS announced new savings of around<br />
EUR 70m by the end of 2012 (including EUR 50m already announced in<br />
November); EUR 38m is expected to be achieved in Italy, the remaining EUR 32m<br />
in Spain. Note that, due to the business seasonality, Q1 EBITDA is not a<br />
significant proxy on the annual profitability of the group.<br />
We expect stable net debt as at March 31, compared to EUR 938m at the<br />
end of December, in absence of any cash-out for restructuring costs.<br />
RCS Q1 2012 preview (EUR m)<br />
Page 68 of 80 European Securities Network<br />
Q1<br />
2011<br />
Q1<br />
2012e<br />
Please refer to important disclaimer on the last page<br />
Y/Y Note<br />
Turnover 473 432 -8.6% -4% in organic terms<br />
Newspapers Italy 146 140 -4.2% Adv -3%, circulation -1.5%<br />
Newspapers Spain 117 105 -9.9% Adv -15%, circulation -5%<br />
Magazines 51 49 -3.4% Adv -2%, circulation -5%<br />
Books 100 104 4.3%<br />
TV production 6 5 -16.9% Yatch&Sail activities sold in Q4<br />
Other (corp., DADA, adj.) 54 29 -45.5% Dada.net sold in Apr. 11<br />
EBITDA adjusted 5 3 -42.0% Operating leverage effect<br />
Margin 1.1% 0.7% -.4 pp -<br />
EBITDA reported 3 3 -0.8% -<br />
Margin 0.7% 0.7% .1 pp -<br />
EBIT -21 -22 3.4% -<br />
EBT -27 -29 7.5% -<br />
Net Debt 950 934 -1.7% flat vs. Dec 2011 (EUR 938m)<br />
Source: Company Data, BANCA AKROS estimates<br />
Conclusion & Action: We expect a mixed set of results, including top-line<br />
deterioration, slightly positive EBITDA and neutral cash flow trend in Q1.<br />
Speculative appeal on a potential shareholder reshuffle and corporate action<br />
(disposal of Flammarion) continue to drive the stock performance.
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