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Mirrabooka Investments Maintains Its Final Dividend & Declares A Special Dividend

They need an advice. Young married couple talking while sitting on the therapy session with psychologist

Mirrabooka Investments Ltd (ASX: MIR) declared a final dividend of 6.5 cents per share, fully franked, for FY21, in line with the preceding final dividend.

In addition to the final dividend, the company declared a special dividend of 2 cents per share, fully franked, bringing the total dividends for FY21 to 12 cents per share.

The full dividend (final and special) will be collected from capital gains on which the Company is or will be taxed. 

The pre-tax attributable gain (“LIC capital gain”) associated with the dividend is 12.14 cents.

The dividend will trade ex-dividend on July 28, 2021, and will be paid on August 17, 2021.

Mirrabooka Investments Ltd NTA (NET TANGIBLE ASSETS) per share is currently marked at $2.96, dividend yield at 2.40% and PE at 106.92 for the year 2021. 

The current price is $4.16 per share of Mirrabooka investments Ltd.

Company Profile

Mirrabooka Investments Ltd (ASX: MIR) was founded in 1980 by Mr. Robert Mark Freeman and is an Australian based company. Mirrabooka Investments Ltd is a publicly traded investment company that focuses on small and medium-sized businesses in Australia and New Zealand. The company has been in operation since April 1999 and debuted on the ASX on June 28, 2001. Mirrabooka seeks to offer shareholders with medium- to long-term benefits, including strong dividend yields, by making core investments in chosen small and mid-sized businesses. It invests in 50-70 companies outside of the S&P/ASX 50 Leaders Index. 

 (Source: FactSet)

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Dividend Stocks Philosophy Technical Picks

Heady (ASX: JHX) Raw Materials Inflation Offering Little Challenge to Hardie in Early Fiscal 2022

After patenting cellulose-reinforced fibre cement in the late 1980s, the Australian company entered the North American market in 1990, establishing its business with the benefit of patent protection. In doing so, the company’s product line has become synonymous with the product category. The firm now enjoys 90% share in fibre cement siding in North America, its largest and most important market, with similar positions in Australia and New Zealand. Fibre cement siding possesses durability advantages and superior aesthetics over vinyl cladding, leading to vinyl’s market share eroding to about 26% today from around 39% in 2003. At this same time, fibre cement’s share has increased to 19%, almost entirely due to increased penetration for Hardie’s product.

Hardie’s siding product range is now in its seventh iteration of product innovation, known as HardieZone, under which the product formulation is tailored to the different climatic zones within North America, increasing durability. Meanwhile, the company assesses its competitors’ product as equivalent to somewhere near its second generation of product, which Hardie released in the mid-1990s. The continued reinvestment in R&D supports Hardie’s strong brand equity and thus perpetuates the price premium that Hardie’s range attracts. 

Financial Strength 

Balance sheet flexibility has improved markedly in early fiscal 2021 despite the economic shock delivered by the coronavirus pandemic. Hardie will return to its regular dividend policy from fiscal 2022 after regular dividends were suspended in early fiscal 2021 in response to the pandemic. Leverage–defined as net debt/EBITDA–stood at 1.0 times at the end of the first quarter of fiscal 2022.Hardie runs a conservative balance sheet with leverage typically within a targeted range of 1-2 net debt/EBITDA. With net debt/EBITDA of 1.0 at the end of the first quarter of fiscal 2022, significant headroom exists relative to Hardie’s leverage covenant, calibrated at a net debt/EBITDA of 3. 

Therefore, Hardie has significant capacity to return surplus capital to shareholders.Hardie’s asbestos-related liability—the AICF trust–has a gross carrying value at fiscal 2021 year-end of USD 1.135 billion and remains an overhang. However, payments to fund the liability are capped at 35% of trailing free cash flow. Narrow-moat James Hardie is off to a flying start in early fiscal 2022 despite substantial inflationary pressures in raw materials and freight which, year-to-date, have shown little sign of abating. Our revised forecast sits slightly above the midpoint of Hardie’s upwardly revised full-year fiscal 2022 net income guidance range of USD 550 million-USD 590 million. Hardie continues to execute impeccably. 

Hardie’s Growth 

First-quarter North American fibre cement volumes rose 21%, tracking significantly above the broader market for exterior wall siding. Reflecting the year-to-date momentum in Hardie’s market share gains, we upgrade our full-year expectations for Hardie’s growth above the North American market index, or PDG, to 9.6% from a prior 7.9%. We lift per share our fair value estimate by 8% to AUD 34.20/USD 25.00, due to the recent depreciation of the Australian dollar. Accordingly, the North American softwood pulp price increased 23% in Hardie’s first quarter to USD 1,598 per tonne. Hardie continues to make progress against its cost savings targets under its ongoing lean manufacturing programme. We continue to expect achievement of USD 340 million in cumulative savings under the lean manufacturing programme by fiscal 2024, a USD 233 million increment over the USD 107 million in incremental cost-out achieved through to the end of fiscal 2021.

Bulls Say’s 

  • James Hardie’s clear leadership in the fibre cement category should drive growth in market share in the North American siding market. We forecast the company retaining its 90% share of the category, while fibre cement climbs to 28% of the total housing market.
  • Hardie’s strong brand equity translates into pricing power, allowing for inflation in manufacturing costs to be easily passed on, thus protecting profitability in the face of imminent input cost inflation.
  • The Fermacell acquisition could finally unlock Europe as an avenue of significant growth following market saturation in North America.

Company Profile 

James Hardie is the world leader in fibre cement products, accounting for roughly 90% of all fibre cement building materials sold in the U.S. It has nine manufacturing plants in eight U.S. states and five across Asia-Pacific. Fibre cement competes with vinyl, wood, and engineered wood products with superior durability and moisture-, fire-, and termite-resistant qualities. The firm is a highly focused single-product company based on primary demand growth, cost-efficient production, and continual innovation of its differentiated range. With saturation of the North American market in sight, the acquisition of Fermacell in early 2018, Europe’s leading fibre gypsum manufacturer, will provide Hardie with a subsequent avenue of growth.

(Source: Morningstar)

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Technology Stocks

Nvidia’s (NASDAQ NVDA) Revenue Continues To Rise, Despite Concerns about Cryptocurrency Demand

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The firm had record showings in both gaming and data center segments, but we are concerned with the surge of demand for Nvidia’s gaming GPUs used in cryptocurrency mining (specifically Ethereal), as we view this application as a volatile one that could lead to lower GPU sales if crypto prices trend down.

Nvidia continues to execute well in growing its data center business thanks to its A100 GPU for Artificial Intelligence and networking products from its 2020 Mellanox acquisition. Nvidia is paying a high multiple for ARM’s earnings. The Fair value estimate of Nvidia is $515 per share. First-quarter sales grew 84% year over year to $5.7 billion, with gaming and data center revenue up 106% and 79%, respectively. Data center sales benefitted from the inclusion of Mellanox and continued adoption of Nvidia’s A100 GPUs. Gross margins during the first quarter grew 100 basis points sequentially thanks to a more favorable product mix. Nvidia’s gaming’s GPUs are receiving an artificial boost from crypto mining that could be difficult to sustain.

The chief growth drivers are expected to be gaming; data center, and crypto mining processors, or CMPs. CMPs are optimized for crypto mining power efficiency and will provide Nvidia’s management some visibility into the contribution of crypto mining to total revenue.

Company’s Future Outlook
We estimate crypto mining related demand contributed around $400 million to $500 million in GPU sales during the quarter. It is expected that the firm’s automotive segment to resume growth in the coming years as its autonomous solutions are adopted and its legacy infotainment business is ramped down. Specifically, Nvidia’s automotive design win pipeline exceeds $8 billion through fiscal 2027. Management expects second-quarter sales to be at a midpoint of $6.3 billion, which implies 63% year-over-year growth and was also ahead of our estimates. For the second quarter, CMP sales are expected to be $400 million. Nvidia’s channel inventories remain lean, and management expects the firm to be supply constrained into the second half of the year. While we anticipate strong growth for Nvidia in the coming quarters, we remain vigilant of signs of weaker crypto-mining demand for its GPUs should crypto prices fall.

Company Profile
Nvidia Corporation (NASDAQ: NVDA) is the leading designer of graphics processing units that enhance the experience on computing platforms. The firm’s chips are used in a variety of end markets, including high-end PCs for gaming, data centers, and automotive infotainment systems. In recent years, the firm has broadened its focus from traditional PC graphics applications such as gaming to more complex and favorable opportunities, including artificial intelligence and autonomous driving, which leverage the high-performance capabilities of the firm’s graphics processing units.

(Source: Morningstar)

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Global stocks

Raising Our BioNTech (BNTX: NASDAQ) FVE to $172 Following Q2 Update; Forthcoming Oncology Data Could Add Upside

The emerging biotech’s first commercial vaccine, for COVID-19, received its first authorization in December 2020, and its early-stage pipeline and mRNA technology platforms have caught the eye of several large pharmaceutical companies, resulting in collaborations and partnerships. BioNTech’s internal discovery platform is focused on mRNA, including off-the-shelf and personalized mRNA drugs, but opportunistic acquisitions have brought in targeted antibodies and cell therapies as well. As such, BioNTech is not overly reliant on any one key drug candidate or drug class at this point, and it is poised to tackle cancer via many different mechanisms.

Further, the company has a burgeoning vaccine pipeline for infectious diseases. In partnership with the Bill & Melinda Gates Foundation, BioNTech is developing vaccines for HIV and tuberculosis, and the company’s COVID-19 program in partnership with Pfizer and Fosun Pharma was built off an existing partnership with Pfizer for an influenza vaccine. The COVID-19 vaccine, Comirnaty (BNT162b2), quickly progressed through human trials, culminating in authorization in the United States and Europe in December 2020.

Financial Strength

BioNTech has historically burned through cash to fund research and development of its pipeline. The company has minimal debt on its balance sheet, as it has funded discovery and development with equity issues and collaboration payments from partnerships with large pharmaceutical firms. Outside of BioNTech’s COVID-19 vaccine candidates, we think the earliest approval could arrive in 2023, which would put the company on a path toward steady profitability. Management has taken advantage of a couple of opportunities to acquire early-stage assets and expand its geographic footprint to establish a U.S. research hub at low prices.

BioNTech’s revenue soared to EUR 5.3 billion in the second quarter, with roughly EUR 1 billion in direct revenue for its COVID-19 vaccine in BioNTech territories and EUR 4.1 billion in gross profit share and milestones from partners (chiefly Pfizer, which reported $7.8 billion in COVID-19 vaccine revenue in the quarter). BioNTech now expects full-year revenue from the COVID-19 vaccine of EUR 15.9 billion in 2021. Based on these changes, full global sales of Pfizer/BioNTech’s COVID-19 vaccine of $35 billion in 2021 and $39 billion in 2022, as sales in developing markets and third-dose booster sales to developed markets continue to grow. Increased our assumed probability of approval for Pfizer/ BioNTech’s flu program BNT161 from 60% to 70% given continuing validation of this technology in infectious diseases.

Overall, these changes boost our fair value estimate to $172 per share from $139. BioNTech (and peer Moderna) rapidly building a moat based on novel mRNA technology, although multiple potential competitors, significant uncertainty around the duration of COVID-19 revenue beyond 2022, and ongoing validation of this technology outside of COVID-19 prevent us from assigning BioNTech a moat at this time. While the initial series continues to show 90%+ efficacy at preventing severe disease, efficacy against symptomatic infection has been slowly declining, from a peak of 96% down to 84% in individuals that are more than four months past their second dose. Both Pfizer/BioNTech and Moderna have early phase 2 data showing that a third dose of their authorized vaccines significantly boosts neutralizing antibody activity against the original strain and variants, including the delta variant.

Bulls Say’s

BioNTech’s pipeline, which relies on expertise in mRNA and bioinformatics, will be difficult to replicate by competitors.
BioNTech will be able to command a premium price with its personalized cancer therapies, if successful.
The rapid development of COVID-19 vaccine Comirnaty bodes well for the rest of BioNTech’s pipeline and the future of its mRNA research platform.

Company Profile

BioNTech is a Germany-based biotechnology company that focuses on developing cancer therapeutics, including individualized immunotherapy, as well as vaccines for infectious diseases, including COVID-19. The company’s oncology pipeline contains several classes of drugs, including mRNA-based drugs to encode antigens, neoantigens, cytokines, and antibodies; cell therapies; bispecific antibodies; and small-molecule immunomodulators. BioNTech is partnered with several large pharmaceutical companies, including Roche, Eli Lilly, Pfizer, Sanofi, and Genmab. Comirnaty (COVID-19 vaccine) is its first commercialized product.

(Source: Morningstar)
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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Global stocks

Vinci SA’s (PAR: DG) Strong Construction Market Drives for First Half Recovery & Shares Are Fairly Valued

The concessions business earns high profit margins and enjoys significant barriers to entry. In contrast, the contracting business is less attractive on a stand-alone basis but allows Vinci to draw on its expertise to bid on less competitive concession Greenfield projects, where construction capabilities are needed and thus allow Vinci to selectively bid for higher-margin contracting projects compared with pure-play contracting firms.

Vinci’s highly profitable acquisition of its motorway concession portfolio from the French government in 2006 has formed the backbone of the firm over the past 15 years. However, subsequent public disapproval of the deal has seen the state become less generous in awarding long-term extensions to Vinci’s existing network. Mergers and acquisitions have helped Vinci become the second-largest airport operator. The acquisition of the energy contracting division of ACS will provide Vinci with exposure to the fast-growing renewable energy sector as well as eight concessions mainly in electrical transmission.

Financial Strength

Vinci has been able to withstand the worst of global travel restrictions, which have kept earnings from the group’s concessions business heavily depressed, without a significant impact on the group’s balance sheet. Vinci has enough liquidity to meet financial and operating requirements despite low visibility on the duration of the recovery for the concession segment. Vinci holds EUR 9 billion of cash and cash equivalents, which is enough to cover debt repayments until 2025. Vinci also has access to an unused EUR 8 billion credit facility, which brings Vinci’s total liquidity to EUR 17.3 billion at the end of June 2021. Both Vinci’s airport and auto routes businesses have experienced a sharp upturn in traffic once travel restrictions have eased, which is expected to continue for the rest of 2021. Vinci’s healthy balance sheet has allowed the company to refinance debt at extremely attractive rates.

Bull Says

Vinci’s portfolio of diversified concession assets is a unique opportunity for investors to own irreplaceable infrastructure across multiple assets. Returns are supported by long-term concession contracts and favorable demographics.
Vinci’s balance sheet and global presence will allow the company to be well-positioned to boost their portfolio of high-quality assets, should governments look to privatize ageing infrastructure.

A record high order book of EUR 43 billion for the contracting segment provides earnings visibility as traffic from the concessions business recovers.

Company Profile

Vinci DG (XPAR) is one of the world’s largest investors in transport infrastructure. Significant concession assets include 4,400 kilometers of toll roads in France and 45 airports across 12 countries, making Vinci the world’s second-largest airport operator in terms of managed passenger numbers. The concessions business contributes less than one fifth of group revenue but the majority of operating profit. Vinci’s contracting business is made up of three divisions, offering a broad variety of engineering and construction services.

(Source: Morningstar)
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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Global stocks

Japanese General Insurers Tokio Marine (8766:TKS) Report Stronger-Than-Expected April-June on Rate Hikes, Fewer Accidents

and JPY 5,000 for Sompo Holdings (7% upside) after the three Japanese general insurers reported strong results for April-June, the first quarter in the fiscal year ending March 2022. The shares have risen 4%, 7%, and 13%, respectively, since we published a 51-page report “Pandemic Impact on Japanese Insurers Has Passed” on June 30. 

Economic profit for April-June reached 39% of full-year guidance for Tokio Marine, 48% for MS&AD, and 43% for Sompo, while net profit on a financial accounting basis was 51% of full-year guidance for Tokio Marine, 52% for MS&AD, and 46% for Sompo.  The insurers have thus earned more than 40% of their full-year guidance in the first three months of the year; however, any upward revisions to guidance would likely come later in the year given that insurers’ quarterly earnings are subject to short-term fluctuations from seasonality and technical factors.

The main driver of the stronger-than-expected results was the core domestic nonlife business, which benefited from a continued lower frequency of auto accidents, adjustments to pricing in the voluntary auto line (though we expect price cuts ahead), and robust rate hikes in fire insurance to address rising costs from water leakage and damage. 

Rate hikes in overseas insurance as the global market hardens were a secondary driver. The safe completion of the Tokyo Olympics confirms that potential large losses that might have occurred had the event been canceled are no longer a concern.

Company Profile

Dating back to 1879, Tokio Marine is Japan’s oldest insurance company and was its top property and casualty insurer in terms of market share for many decades. After mergers of its smaller rivals in the past few years, the company is now roughly the same size in the domestic nonlife market as MS&AD and Sompo Holdings, but it remains the most valuable listed Japanese insurer in terms of market capitalization due to its larger overseas business portfolio. The majority of its overseas business is in the U.S., where it has purchased four specialty insurers since 2008: Philadelphia Consolidated, Delphi Financial, HCC, and PURE. It is a member of the Mitsubishi keiretsu group and holds minority stakes in a number of group companies that also rank among its shareholders.

(Source: Morningstar)

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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LICs LICs

Australian Foundation Investment Company (ASX: AFI) Reports FY21 Earnings & Maintains Final Dividend

Two young women talking together with a tablet in the living room. They sit spaced apart to prevent the virus.

The portfolio’s dividends and distributions remained basically constant from the pcp, with the revenue fall driven entirely by a decrease in interest income from deposits.

The Company’s pre-tax NTA per share climbed to $7.45 per share at the end of June 2021, before accounting for the final dividend. This represents a 25% increase above the pre-tax NTA as of 30 June 2020.

In keeping with the FY20 final dividend, the Company declared a final fully franked dividend of 14 cents per share. The full-year dividend will be 24 cents per share, fully franked, which is the same as the full-year dividend in FY20.

The dividend paid as on 31st august is expected to be 14 cents. The current P/E is marked at 58.10 and dividend yield at 2.81%

During this time, the Company dabbled in international stocks by investing a modest portion of its capital (0.5 percent of the portfolio) in an i-”-nternational equities portfolio. (

The worldwide portfolio includes of high-quality companies with a significant competitive advantage, good growth prospects, and a diverse range of industries, as determined by the investment team.

Company profile

Australian Foundation Investment Company (ASX: AFI) is Australia’s largest life insurance company, and it has been investing in Australian and New Zealand equities since 1928. The Date of Listing of Australian Foundation Investment Company (ASX: AFI) is 30 Jun 1962. Incorporated in VIC as Were’s Investment Trust Ltd on 13/07/1928; name changed to Australian Foundation Investment Company Ltd on 25/10/1937. Australian Foundation Investment Company (AFIC) is a closed-end investment corporation. The firm focuses in Australian stock investments. The Company’s investment goal is to provide investors with investment returns in the form of steam franked dividends and capital appreciation. 

(Source: FactSet)

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Philosophy Small Cap Technical Picks

Groupon (NAS: GRPN) Outperforms Expectations in Q2; EBITDA Outlook Improved Due to One-Time Benefit; FVE Maintain

Groupon provides daily deals (in the form of online vouchers) from local merchants to consumers. Groupon’s online discounts cover a variety of services including restaurants, health, beauty and fitness, and home and garden. Groupon’s average take rate on the purchase and/or usage of the vouchers is between 30% and 35%.

Customers can make one-time voucher purchases without guaranteeing repeat business with either the merchant or Groupon in general. This dynamic has led to lackluster revenue growth and consistently high customer acquisition costs that pressure margins. Groupon’s revenue growth has been decelerating and gross margins have been declining since the company went public in 2011.

Additionally, the firm is implementing a more aggressive customer acquisition strategy that requires higher marketing expenses. Although a restructuring plan is in place for a turnaround, we remain concerned about future revenue growth and gross margin compression, both of which may prevent Groupon from yielding excess returns on capital in the long run.

Financial Strength

Groupon ended 2020 with net cash of $421 million. The firm has $250 million in 3.25% convertible notes, which were issued in April 2016 and are due in April 2022. Groupon also has $200 million in revolver borrowings. Groupon burned $63.6 million in cash from operations in 2020. The company’s very high accrued merchants payable balance (nearly 25% of cost of revenue) has a positive impact on cash from operations. Groupon’s free cash flow to equity/revenue ratio has been negative the past three years, but we project this ratio to hit the teens in 2025 as a result of a return to revenue growth in 2022 and margin expansion throughout our explicit forecast period.

Total revenue declined 33% year over year to $266 million, as 86% growth in local was more than offset by the expected 75% decline in goods. Local revenue reached 71% of the prepandemic 2019 levels. Groupon’s gross profit increased 41% to $194 million, resulting in a 73% gross margin, as the lower-margin goods revenue continued to decline. In addition, unredeemed vouchers (mainly in international markets) added $10 million to gross profits. Operating loss of nearly $2 million was a significant improvement from losses of $72 million last year and $7 million in 2019.

In addition, gross profit per North America active user was 10% above the 2019 level. International customer count declined 37% year over year, but the firm generated 10% more gross profit from each than in 2020. Total gross profit per active user increased year over year (17%) and sequentially (13%). Purchases per active user increased 11% year over year but declined 3% sequentially. The firm expects full-year adjusted EBITDA between $115 million and $125 million (up from previous guidance of $110 million- $120 million). The increase is less than the $10 million benefit in the second quarter as the firm is planning to continue its aggressive marketing during the second half of this year. Groupon maintained its $950 million-$990 million full-year revenue guidance.

Bulls Say

Groupon should maintain its first-mover advantage as it leverages its current relationships with local merchants to provide more attractive offerings for consumers.
As more local businesses become more tech-savvy, they may need less hand-holding from Groupon’s salesforce, which could lead to lower costs for Groupon.

Company Profile

Groupon acts as the middleman between consumers and merchants, offering a variety of products and services at discounts via its online store. It offers consumers daily deals (in the form of online vouchers) from local merchants. Groupon also sells products directly to consumers. It generates revenue from the take rate on the purchase and/or usage of the vouchers (40% of total revenue) and from direct sales (60% of total revenue). More than 65% of Groupon’s revenue comes from North America.

(Source: Morningstar)
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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Dividend Stocks

Asset Sales and Plan for Greater Investment by Lumen Technologies Inc’s (NYSE: LUMN) Put Onus on Management to Return to Sales Growth

Lumen’s fiber holdings make it one of the biggest communications infrastructure providers in the U.S., and its extensive network is matched by few other companies. However, technological advances continually improve networking efficiency and enable less costly solutions to store and transport data. Consequently, even in Lumen’s business services segments, which account for over 70% of total revenue, we think revenue is likely to continue declining. Lumen’s business customers will continue to benefit from the ability to use shared, rather than private, networks and technological advancements that require less bandwidth and enable more efficient routing.

Lumen’s intention to sell a substantial portion of its incumbent local exchange carrier, or ILEC, business should relieve the firm of a big chunk of its fastest-declining revenue (voice) and lower-quality consumer Internet revenue. While the divestiture alone should moderate the firm’s sales declines, it will also result in significantly lower cash flow, which will be further diminished because the firm expects to ramp up investment in its remaining business. 

Financial Strength

Lumen Technologies Inc’s (NYSE: LUMN) continued strengthening its financial position in 2020. In 2020, the firm paid down nearly $2 billion in debt and refinanced $13 billion in debt to push out maturities and reduce interest rates. At the end of 2020, the firm had $400 million in cash, $32 billion in debt, and a net debt/adjusted EBITDA ratio of 3.6. Less than $7 billion of the debt now matures before the end of 2024. With the free cash it generates, we project Lumen has the ability to reduce debt materially while also having a substantial amount of cash to return to shareholders and not scrimping on any capital investment needs. It reliably pays about $1 billion in annual. While the firm is set to sacrifice well below 30% of EBITDA between these transactions and the expiration of CAF-II funds the firm has been receiving. Its dividend for the year 2020 is marked at 10.3 % while in 2019 it was 7.6 %.

Bull Says

  • After selling much of its ILEC business, Lumen may be able to return to sales growth over the next few years rather than face perpetual decline.
  • Lumen has further shifted its business away from the declining consumer and toward the enterprise, which leaves it with a better chance for future top-line growth.
  • The explosion in data use, particularly mobile, could make fiber assets much more lucrative than they have historically been, and Lumen’s fiber holdings place it in the top two or three in the U.S.

Company Profile 

Lumen Technologies Inc’s (NYSE: LUMN) is one of the United States’ largest telecommunications carriers serving global enterprises with 450,000 route miles of fiber, including over 35,000 route miles of subsea fiber connecting Europe, Asia, and Latin America. Its merger with Level 3 further shifted the company’s operations toward businesses (over 70% of revenue) and away from its legacy consumer business. Lumen offers businesses a full menu of communications services, providing collocation and data center services, data transportation, and end-user phone and Internet service. On the consumer side, Lumen provides broadband and phone service across 37 states, where it has 4.5 million broadband customers.

(Source: Morningstar)

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Technology Stocks

ViacomCBS Posts In-Line Q2, but Streaming Momentum Clearly Building

Top-line growth of 8% was driven by the rebound in advertising, the return of live sports, and continued streaming growth. The firm’s streaming platforms posted a strong quarter both in terms of new subscribers and monetization. ViacomCBS also announced a distribution deal with Sky to launch Paramount+ in 2022 in its Western European markets.

Global streaming subscribers increased by 6.5 million during the quarter to 42.4 million, and Pluto, a free platform, added 2.8 million monthly active users to end the quarter at 52.3 million. The recent results and the Sky agreement reinforce our view that the long-term guidance of 65-75 million streaming subscribers by 2024 is very conservative. 

While Paramount+ is only available in 25 markets, we expect much wider distribution by 2024, making the high-end target of another 33 million net adds seem very modest.

Streaming revenue exploded, up 98%, as ad revenue bounced back at Pluto and the smaller streaming platforms like Showtime and BET+ continued to grow their subscriber bases. Streaming subscription revenue improved to $481 million, up 82% year over year and subscription average revenue per user increased 4% sequentially.

 On the ad side, streaming revenue jumped by 102% to $502 million as Pluto continues to improve engagement with domestic time watched per MAU up 45% in the quarter. The June launch of Paramount+ Essential, a lower priced ad-supported tier, should help boost advertising growth.

TV Entertainment revenue increased 23% year over year. Broadcast ad revenue was buoyed by the return of the NCAA Final Four and golf tournaments along with the overall rebound in ad demand. 

Affiliate revenue, up 10%, was driven by strong reverse compensation and retransmission fee growth at the CBS broadcast network. Adjusted EBITDA for the segment dropped by 45% to $216 million as the firm continues to invest in Paramount+.

Cable networks revenue grew by 8% versus a year ago to $3.5 billion. Cable ad revenue increased by 24% as the higher pricing in the U.S. and international growth more than offset lower ratings. 

Affiliate revenue was up 9% as the expanded online distribution from services like YouTube TV and rate increases more than offset the ongoing cordcutting trend.

Company Profile

ViacomCBS is the recombination of CBS and Viacom that has created a media conglomerate operating around the world. CBS’ television assets include the CBS television network, 28 local TV stations, and 50% of CW, a joint venture between CBS and Time Warner. The company also owns Showtime and Simon & Schuster. Viacom owns several leading cable network properties, including Nickelodeon, MTV, BET, Comedy Central, VH1, CMT, and Paramount. Viacom has also built several online properties on the strength of these brands. Viacom’s Paramount Pictures produces original motion pictures and owns a library of 2,500 films, including the Mission: Impossible and Transformers series.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.