Publishing & Broadcasting Limited

Submitted by Craig Strzelecki on 18 April, 2007 - 17:53

Publishing & Broadcasting Limited (PBL) has a Neutral 1 broker call and a share price target of $22.60 from sharemarket analyst UBS. PBL has announced an agreement to acquire 19.6% of Fontainebleau a Las Vegas casino developer for $250 million. Fontainebleau Resorts is developing a US$2.8b casino and hotel complex on the Las Vegas strip that is expected to open in late 2009 and is undertaking a US$500m renovation of its Miami Beach Fontainebleau Resort, set to re-open in 2008. The deal is expected to close in May 2007. PBL will be a cornerstone investor not the asset manager in this deal. Management of the casino and other assets will remain with the existing team, the casinos will not be rebranded. Crown and PBL will have the input commensurate with its position as a ~20% shareholder. Given PBL's extensive quality casino expertise, we had expected that any involvement in Las Vegas would have been structured more as a management agreement. Deal is (marginally) earnings dilutive according to the analyst. The investment will reduce interest revenue by ~A$16m pa while we do not expect PBL to receive dividends prior to FY11. the analyst estimates that FY08 EPS will reduce by ~1.4%. From a broader perspective, the issue with this type of investment for Publishing & Broadcasting Limited, particularly those that are not managed/controlled, is that it may become increasingly regarded as a holding company for assets. The analyst's target price is derived as our '08 based sum of the parts.

Publishing & Broadcasting Limited is listed on the Australian Stock Exchange (ASX) under stock code PBL. You can view their investor website here. PBL was listed on the ASX on 4 June, 1987. James Packer is the Executive Chairman and the managing director is John Alexander. Publishing and Broadcasting (PBL) is involved in gaming and entertainment; television production and broadcasting; magazine publishing and distribution; investments in the internet, pay television; telecommunication and other media and entertainment sectors. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade PBL. Check your charts and good luck with your share trading!

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