Mondo TV (MI:MTV) is set to focus its efforts on a smaller number of more profitable properties, following a difficult H218. The group’s geographic spread will also be readjusted – partly as a result of existing Asian clients scaling back their purchasing – giving a better balance between destination markets. The global market appetite for quality content remains strong with channel proliferation. On reduced forecast revenues, Mondo TV remains comfortably profitable, with net cash on the balance sheet, and should return to being cash flow positive in FY20 in our modelled scenario. Our view is that the attrition of the share price has been overdone.
Revised FY19–23 Guidance
Following the untimely death of the group’s founder, Orlando Corradi, in November, management brought forward the publication of the next business plan, which was originally scheduled for January, in order to reassure shareholders that the board was on top of the issues facing the group. The Q3 interim statement in November showed lower revenues, ascribed to reduced library sales, with FY18 estimates unlikely to be met. The more recent statement indicates a further deterioration in trading, particularly in Asia. This is both macro-related in terms of a weakening Chinese consumer economy and specific, whereby customers cancelled previous projects or revised investments in response to weaker broadcaster demand. New FY19–23 financial objectives were issued, indicating a lower revenue base than previous guidance and growth resuming from FY20. With a reduced production slate, capex is significantly reduced (€20m down to €11m for FY19). Our new forecasts, with previous forecasts withdrawn, are based on these objectives, with some built in contingency.
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