Reworld Media (PA:ALREW) is delivering the financial returns on its strategy of digital transformation of well-established media brands, supplemented with the ad tech expertise of Tradedoubler (30% owned). FY17 figures show good revenue and margin progress from the media brands, with Tradedoubler starting to recover post repositioning and restructuring. The group also has a strengthening balance sheet. Our updated model suggests a strong uplift in adjusted PBT in FY18 driven by the growing digital element in Branding and the continuing turnaround at Tradedoubler. The rating is yet to reflect the improving quality of earnings or the scale of the opportunity.
Proof of concept established
Reworld’s business premise is to take well-recognised consumer brands and add digital dissemination to the mix. This drives reach and monetisation to take full advantage of the shift in the media landscape towards digital. The strength of its brands and the quality of content has led to strong growth in unique visitors to the online sites, doubling to 28 million in December 2017 versus the prior year. The investment in building video content resource is particularly paying off, with management estimating that the group is now the fourth largest online video publisher in France. The derived data from this traffic, combined with the affiliate marketing strength of Tradedoubler, present an attractive proposition to advertisers.
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