Fairfax Media Limited Update

Submitted by Craig Strzelecki on 20 April, 2007 - 18:14

Fairfax Media Limited (FXJ) has a Neutral 2 broker call and an increased $5.40 share price target from sharemarket analyst UBS. The analyst has observed that the FXJ merger proposal with Rural Press approved by vote. The Fairfax-Rural Press Scheme of Arrangement was comfortably passed at the Rural Press shareholder meeting today. Assuming court approval on April 23rd, RUP and RUPDPs cease trading at the close on Tuesday 24th April. As per the analyst's report of early February, whilst Fairfax and Rural Press have estimated synergies of at least $35m [$31m in cost and $4m in revenue], UBS has estimated this could be as much as $67m (in synergies) [$52m + $15m] which equates to around 2.5% of the combined group cost base and 0.5% of the combined revenue. This is before the assumption of any broader operating improvements under the new management team. With the strengthening US$, the '08 paper price outcome may prove better than our current forecast of a 1.7% decline. The impact of a maximum 7% decline would be a further incremental $13m or 1.5% to combined group EBITDA. The analyst's forecasts for Fairfax Media Limited (FXJ) have been upped by ~6-7%, ~1% pt relating to the stronger NZ $. Their valuation has increased by 40 cents to $5.25, while their target price has been lifted from $5.00 to $5.40. Their valuation is derived as an average of our sum of the parts, P/E and dcf on an '07 basis, while their target price effectively rolls this forward to '08.

Fairfax Media Limited is listed on the Australian Stock Exchange (ASX) under stock code FXJ. You can view their investor website here. FXJ was listed on the ASX on 8 May, 1992. Ronald J Walker is the Chairman for Fairfax Media and David Kirk us the CEO. The company is involved in information and entertainment publishing in newspaper, magazine and electronic formats. Fairfax Media Limited [ASX:FXJ] is Australasia's largest newspaper publishing group. In Australia, mastheads include The Sydney Morning Herald, The Age, The Australian Financial Review, BRW and The Sun-Herald. Its New Zealand mastheads include The Dominion Post, The Press, The Sunday Star-Times, TV Guide, and Cuisine. In addition, Fairfax publishes regional and community newspapers, financial and consumer magazines. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade FXJ. Check your charts and good luck with your share trading!

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