Battle to Be the Master of Domain Begins; Fairfax FVE Lifted to AUD 1.00 Per Share

TPG Consortium Returns with Cash but Still Just an Indicative Proposal for Fairfax Media

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Equity Bottom-Up

Shares in Fairfax Media are trading at 27% above our AUD 0.71 per share fair value estimate. This equates to 14.2 times our fiscal 2017 EPS estimate and 6.6 times our EBITDA estimate--metrics we view as generous given our forecast 1.3% CAGR in EPS for the next five years.A key reason for the elevated stock price is likely to be the market's bullish view on the jewel in Fairfax's crown, namely, its multiplatform property listing and advertising division, Domain. It is the only business within Fairfax enjoying growth, with Domain EBITDA having surged from AUD 44.6 million in fiscal 2012 to a forecast AUD 112.8 million in fiscal 2016, equating to an average annual growth of 26.1%. It is possible we are underestimating Domain's intrinsic value. Therefore, it is constructive to conduct a "what-if" analysis.Analyst: Brian Han

Shares in Fairfax Media are trading at 27% above our AUD 0.71 per share fair value estimate. This equates to 14.2 times our fiscal 2017 EPS estimate and 6.6 times our EBITDA estimate--metrics we view as generous given our forecast 1.3% CAGR in EPS for the next five years.A key reason for the elevated stock price is likely to be the market's bullish view on the jewel in Fairfax's crown, namely, its multiplatform property listing and advertising division, Domain. It is the only business within Fairfax enjoying growth, with Domain EBITDA having surged from AUD 44.6 million in fiscal 2012 to a forecast AUD 112.8 million in fiscal 2016, equating to an average annual growth of 26.1%. It is possible we are underestimating Domain's intrinsic value. Therefore, it is constructive to conduct a "what-if" analysis.Analyst: Brian Han

Domain Remains the Main Swing Factor for Fairfax Media