| Tue 10 Jun 2003, 9:59 | | Kagiso Media looks beyond its lower rating |
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Shares trading at much-improved 360c
Consumer Industries Editor
CAPE TOWN Prejudice towards small capitalisation companies, lack of share tradability and nervousness about the long-term commitment of its major shareholder have led to Kagiso Media, one of the most cashrewarding of the listed media companies, being rated below its peers.
Kagiso Media shares are trading at 360c, which is a significant improvement over the 260c of 12 months ago and a faster rate of growth than the rest of the media sector. But the shares show a price to earnings ratio of only 6,8 times, which is below Johnnic Communications' 9,8 times and Caxton's 10 times. Primedia, the group most akin to Kagiso Media, has a negative price to earnings ratio, which makes comparisons impossible.
Kagiso is holding almost R112m in cash on its balance sheet and has no debt. In the six months to December it reported a 72% rise in headline earnings and declared a total dividend of 60c, of which 40c was a special dividend. This followed continuous growth in turnover and earnings before interest, tax, depreciation and amortisation for every financial year since 1998.
Kagiso owns 91% of East Coast Radio, which, according to the latest annual report, was delivering advertisers' messages to 35% of the six to 10 living standards measure categories in KwaZulu-Natal. Kagiso holds 42,5% of Jacaranda radio station, which has grown faster than the industry average and last year had a seven-day listenership of 1,73-million last year, the largest regional commercial station in SA.
Kagiso is said to be a keen bidder for a stake in New Africa Investments Limited's media assets. But if unsuccessful, there may be new opportunities if media ownership regulations are relaxed. A spokesman for the Independent Communications Authority of SA said yesterday it was aiming to release its final policy document in late August.
Despite consistent performance, generous dividend payments and potential for growth, Kagiso Media's shares are reined in by the lack of liquidity. The last annual report shows only 8,9% of the issued shares traded in the 2002 financial year.
Kagiso Trust Investments (KTI) owns 44,5%, Brait Private Equity 16,4% and Allan Gray 12,2%. KTI, which indicated a few years ago it wanted to exit its media interests, appears to have changed its strategy and is now a long-term investor. Although this should eliminate fear of an overhang of shares, it also suggests liquidity may not be eased. That would be a more welcome solution for the other shareholders than a dilution through new issues.
Jun 10 2003 07:35:58:000AM Charlotte Mathews Business Day 1st Edition
