looks like they want to merge HT Digital with the newspaper business.
Digital media business are usually loss making and they need funds from the
newspaper business to grow. Some media houses simply park the high-cost
liabilities like employees, infrastructure, etc of the digital business
with the newspaper business in order show some profits in the digital
venture.
disclosure: no holding and no uptodate research on this company.
So In voting I will get option whether I approve merger or disapprove? And if yes it would make sense to choose disapprove?
Where all the companies are giving dividends, HMVL has no announcement despite sitting on huge cash. Neither there are any acquisition opportunities.
HMVL newsprint cost will decline further as impoet duty on paperboard is being zeroed in this budget.
The margins of the media and entertainment sector as a whole has shown some improvements .
In basis of OPM Jagran , HT media and HMVL have shown a good growth .
Circulation revenues of the print revenue has remained in the growth path .
HMVL is sitting on a huge cash and FCF as a percentage of sale is more than 5 % which puts it as a cash generating company . The recent concall regarding management views on cash has been a positive too saying that it hasn’t found good opportunity to invest and thus cash is best to fetch 9 % ROI rather than deploying it atore aggressive expansion plans putting it at stake the shareholders money .
The company is expected for a good quarter result thus HMVL is long way to go before it unfolds the real picture
Disclaimer : 5 % of the portfolio have been invested in HMVL through our Management company . I am not a SEBI registered analyst to give advice this please consult your registered analyst and consider the other options .
Was trying to compare HMVL with jagran and dainik bhaskar. Does anyone have source to IRS and ABC circulation data.
Here is the link for IRS 2014 top line findings
http://mruc.net/sites/default/files/IRS%202014%20Topline%20Findings_0.pdf
Though this gives good high level view, I have not been able to get my hands on more granular data.
It is encouraging to see the amount of work and write up done by various members about this stock and in particular desaidhwanil.
The only reason this stock has low P/E is answered by Ramdeo Agrawal in this video https://www.youtube.com/watch?v=svqaii3yHd4. Agrawal hits the problem of HMVL on the head at (1:13:01 - ie 1hr 13mins). This panel also discusses as to how much cash a company should hold.
No doubt the promoters are astute investors, having said that it is ironic that they are paying fees to invest in debt mutual funds specially in a country having inflation when your own stock is currently yielding more than they are. A good fund manager would do a buy back of their own stock if they are trying to avoid dividend distribution tax.
Hmvl cannot do a buyback… They already own 75%
Well then they should know how to manage capital allocation. Please watch this video. Kenneth Andrade explains it beautifully as to what a good business is. The risk small investors run is wrong capital allocation by the management. Probably to just to save DDT.
Since they are owning 75% of the business it should be all the more reason to buy back shares. For example if the other media companies are selling for 1.5x the cost of your business, is it not prudent to buy back your own business that is selling at a lower price than the ones available in the market?
I agree that capital has to be allocated properly. What I am trying to say is company cannot do buyback because if they do then their shareholding will go above 75% which is not allowed as per sebi rules. Company have to think of other ways to utilize cash or return back to shareholders.
Yes, that is correct they cannot increase their holdings and hence they have to increase dividends. But then again if the management has vested interest in not distributing dividends if it is hurting them in taxes, the interest of the minority holders is put to risk. The argument that the company is holding cash to expand inorganically can be justified only to an extent.
The company can always raise debt to a level of 0.3 of operating cash flow if they find a suitable acquisition. Particularly when they are holding so much cash. The question here is not about the company holding retained earnings. The question is as to what percentage they are holding and to provide investors a clear roadmap as to how much of retained earnings they are planning to hold. Once this uncertainty is addressed by the management the price will automatically shoot up. The bottom line comes down to … management putting every effort to protect the interest of minority shareholders.
Agree. And they have been repeating the same thing in every of their conf call that they are looking for acquisition. There is hardly any big acquisition target available and if they have to make acquisition they can raise debt.
It is good to know that we both agree that deployment of capital by management is key to higher P/E multiple and better shareholder return. Question is, how can an individual investor ensure management has required skills in making right acquisitions by not paying more and acts on behalf of minority share holders.
Evidence so far proves otherwise and is what depressing this stock price. That is, hoarding of cash is not the issue, ratio of holding cash is the issue and brings intention and integrity of management to question.
For example, desaidhwanil’s opening statement in this thread regarding Buffett and Charlie Munger has to be seen in right perspective. Let us say for example Berkshire has bought 28 local newspaper companies, it does not mean one can replicate Berkshire’s return by emulating them.
Reason being Berkshire would buy the entire company such as HMVL and would deploy the earned capital into other businesses with similar or higher return and will ensure not to pay more for acquisitions. They have world’s best record of deploying capital and have proved their integrity.
Bottom line is…in any case individual investors have to tread very cautiously as one has to rely entirely on management’s skill and integrity.
Can some one please explain what is this resolution? Is is HMVL buying HT Digital Streams? And if I do want company to do so should i choose against option?
As I understand, HT Digital Streams is a public company incorporated in 2015 and is located in Patna. Not sure if parent company HT media and HMVL co-own this company.
HVML is offloading its media content management business to HT Digital Streams on a slump basis. That is to say, the value of asset transfer is decided by auditors at fair value. Usually, an asset deemed to be loss making is transferred on slump basis. Maybe in this instance, HT digitial streams has issued shares to parent company HT Media and HMVL in return for transfer of assets.
It would be hard to say if this is good or bad for HMVL. Parent company HT media is also transferring its media content business to this entity. Probably, to have a common platform to manage media content across both companies HT Media & HMVL. Particularly, if both companies are duplicating efforts in producing media content.
One way of looking at it is … HMVL can reduce costs of media content by having a third party provider supplying media content as in-house cost could be expensive, or maybe to increase synergies between HT Media & HMVL.There are accounting advantages as well to both companies.
The other reason maybe promoters may intend to have complex cross holdings.
Good results
http://www.bsealerts.in/ann.php?104575
Some warning signs. Very poor dividend. Borrowings increased from 98Cr to 172Cr despite company holding big pile of cash. Something seems fishy here. I’m better parting ways with such management.
Short term borrowings increased from 98Cr to 172Cr.
IMHO, it is better to wait & understand the reasons behind this, than quickly jumping the gun.
On the assets side, I could see Current investments increase from 88Cr to 170Cr.
CONFERENCE CALL - from Capital Markets
Expects OPM to grow every year by couple of points
Hindustan Media Ventures (HMVL) held a conference call on 25 May 2016 to discuss the financial performance for the quarter and year ended March 2016.
For the quarter, it reported 13% rise in income from operations at Rs 246.4 crore on the back of 15% growth in advertisement revenue to Rs 168.4 crore due to increase in advertisement volumes and circulation revenues inclined by 5% to Rs 53.4 crore due to higher circulation and higher net realization per copy. The resultant PAT grew by 20% at Rs 46.9 crore.
The company continues driving both volume and yield growth across geographies on the back of improving economic environment.
UP to continue on its growth trajectory while increased focus on Bihar and Uttarakhand will consolidate its position.
Focus on growing adoption of the new Hindustan app launched in January’2016.
Soft newsprint prices along with advertisement revenue helped EBIDTA growth.
Ad rev growth for UP and Uttarkhand is 20% while for Bihar and Jharkhand was 11-12% for FY16.
For FY17 - Expects Bihar and Jharkhand to have reasonable growth.
For FY16, employee cost had one off provision. Employee cost as % of revenue will be in 13% range for FY17.
Dividend has been maintained as board to maintain cash as the company is looking at acquisition opportunity in coming times. Acquisition will be only in print media space that too in Hindi or vernacular language.
The company will maintain a balance between volume and yield increase in advertisement for growth.
Margin in UP and Uttarakhand is upwards of 15-16%. Bihar and Jharkhand - margin upward of 35%.
High advertisement growth, operational leverage and cost efficiency will help margin growth. The mgmt expects OPM to grow every year by couple of points on back of advertisement growth. Newsprint price decline will also help margin growth. When newsprint price hardens, margin growth will be not that much but overall margin will increase. UP and Uttarakhand also had room for margin growth.
Newsprint annual consumption was at 96306 MT.
Yield in UP – depending on categories, the company is at 50- 70% of leading player and ahead of Amar Ujala.
Govt. contribution for advertisement revenue was slightly more than 20% for Q4.
Most of categories did well for Q4 but for education which was flat.
Rs 643 crore net cash with company.
Growth in circulated copy in Q4 was up by 3%.
For Q4, volume:price ratio for advertisement growth was 80:20 .
The mgmt expects newsprint price to move up by 3-4% in FY17.
Operating cash flow for FY16 was Rs 111 crore and for Q4 was negative at Rs 21 crore because of brand purchase.
