New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

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New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

Sky Network Television / Equity Bottom-Up

<h2>Sky TV (SKT) 1H22 Result – Initial Impressions</h2>
Sky TV (SKT) reported a 1H22 result ahead of our expectations with some clear positives but also a few question marks. A hard result to call. On a clear positive side we note a commitment to pay out 50-80% of FCF which point to a dividend just shy of 20cps already this year. Additionally SKT guided to having approximately NZ$120m (approximately 70cps) of cash on the balance sheet once the sale of its property has settled. Looking at the results themselves streaming revenues was a clear positive, up 30% from the first half (and 33% yoy), with both ARPU and Subscribers up meaningfully. On the slight negative side was a further loss of 10k (2%) of SkyBox customers, only a modest decline of the pace of loss as of late and higher than we had anticipated. The key here will be the new box and the close of Vodafone TV. ARPU was up for Sky Box customers – but the trends here are muddled due to the, in our view, unfortunate choice to include broadband in satellite subscriber revenues.
Points of interest
<ul>
<li>1H22 summary: EBITDA $85.3m, 4% ahead of our expectations, but guidance maintained. Net profit NZ$28.3m, 18% ahead of our estimates due to lower depreciation. Strong cash generation. FCF NZ$40m (22cps)</li>
<li>Guidance/outlook: No change to previous guidance of revenue between NZ$725-745m (FB; NZ$734m), EBITDA between NZ$150-160m (FB; NZ$161m) and NPAT between NZ$40-48m (NZ$46.9m).</li>
<li>Satellite subscribers: Down 10k from first half. ARPU up, but this includes broadband, we estimate it to be up even excluding broadband but this is an unfortunate choice of reporting, in our view, that may impact the stock today.</li>
<li>Capital management: Committed to paying 50-80% of FCF in dividend, which we estimate translates to just shy of 20cps. Our forecast is for 10cps this year and 20cps in FY23 onwards.</li>
</ul>
Investor briefing – 10am NZT (8am AEST)
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1H22 result summary
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/259/229/original/image_81156849161645667003513.png?1645667004" class="editor-image img-responsive" data-smartkarma-image-id="259229"></figure>
Source: Forsyth Barr analysis, Company reports

Sky TV (SKT) 1H22 Result – Initial Impressions
Sky TV (SKT) reported a 1H22 result ahead of our expectations with some clear positives but also a few question marks. A hard result to call. On a clear positive side we note a commitment to pay out 50-80% of FCF which point to a dividend just shy of 20cps already this year. Additionally SKT guided to having approximately NZ$120m (approximately 70cps) of cash on the balance sheet once the sale of its property has settled. Looking at the results themselves streaming revenues was a clear positive, up 30% from the first half (and 33% yoy), with both ARPU and Subscribers up meaningfully. On the slight negative side was a further loss of 10k (2%) of SkyBox customers, only a modest decline of the pace of loss as of late and higher than we had anticipated. The key here will be the new box and the close of Vodafone TV. ARPU was up for Sky Box customers – but the trends here are muddled due to the, in our view, unfortunate choice to include broadband in satellite subscriber revenues.
Points of interest

1H22 summary: EBITDA $85.3m, 4% ahead of our expectations, but guidance maintained. Net profit NZ$28.3m, 18% ahead of our estimates due to lower depreciation. Strong cash generation. FCF NZ$40m (22cps)
Guidance/outlook: No change to previous guidance of revenue between NZ$725-745m (FB; NZ$734m), EBITDA between NZ$150-160m (FB; NZ$161m) and NPAT between NZ$40-48m (NZ$46.9m).
Satellite subscribers: Down 10k from first half. ARPU up, but this includes broadband, we estimate it to be up even excluding broadband but this is an unfortunate choice of reporting, in our view, that may impact the stock today.
Capital management: Committed to paying 50-80% of FCF in dividend, which we estimate translates to just shy of 20cps. Our forecast is for 10cps this year and 20cps in FY23 onwards.

Investor briefing – 10am NZT (8am AEST)
Requires pre-registration;&nbsp;https://s1.c-conf.com/diamondpass/10019325-wy364hs.html
1H22 result summary

Source: Forsyth Barr analysis, Company reports

Sky TV (SKT): 1H22 Result – Initial Impressions