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FY23 results in line Vivendi reported 2.6% organic revenue growth, driven by a 2.9%/4.4% performance at Canal and Havas respectively. Havas performance came ahead of WPP, Omnicom and Interpublic. Underlying adj. operating profit grew 12% to EUR934m, broadly in line with an inconsistent consensus (not every analyst had Lagardere in their models). DPS of EUR0.25 was flat on last year and 11% below consensus expectations. FY24 off to a good start Vivendi does not provide numerical guidance but management said that it expects group organic revenue growth of more than 2%, driven by sustained growth at Canal and Havas. It also indicated that 2024 was off to a good start, in particular in Africa where Canal+ has seen a benefit from the African Football Cup. EPS raised on inclusion of Lagardere We have raised our EPS by 7% and 13% for 2024 and 25 as we now include a full year of Lagardere (fully consolidated), recurring restructuring costs, higher financial charges and higher minorities. Our SOP is unchanged and our TP remains at EUR11 after accounting for a 20% conglomerate discount. No further news on break-up Management reaffirmed its interest in breaking up the group into four separately listed entities but did not provide any material additional information. It expects the IPOs to happen at the same time and plans to provide further business details once the project is validated. We believe that Vivendi is still in discussions with French tax authorities on the tax implications of this deal. We reaffirm our Neutral rating on the stock.
Vivendi Vivendi SE
European Media outperformed (+14%) a healthy market in 2023, the sector''s strongest year in a decade. This broad-based outperformance was led by professional information, agencies and classifieds on solid execution, macro/ rates backdrop and new product hopes with a boost from MandA. Prosus and videogames lagged. In a highly diverse sector, stock picking remains key, although we skew towards quality in context of tempering rate expectations and potential positive early Gen AI impacts. Year ahead: 30 key debates for 10 sub-sectors With the media sector''s share price drivers now particularly heterogenous, we think a ''sector view'' is less relevant than perspectives by sub-sector. To that end, over 50+ pages in this note, we explore the 3 shareprice driver ''debates'' for each of the 10 sub-sectors within our coverage (Prosus, online classifieds, music, agencies, videogames, professional info, Edtech, Events, satellites, videogames and online gaming) with particular relevance for PRX, 700, UMG, AUTO, RMV, FLTR, RELX and PSON. We explore key emerging issues for 2024 including the impact of CoStar''s entry into European classifieds, the scramble for market share in US online gaming, the latest machinations of Chinese gaming regulation and implications for Prosus and whether Gen AI can accelerate growth at Tencent, professional info, edtech, videogames and ad agencies among many others. Key picks for 2024 We identify names from across our diverse sub-sectors. We highlight RELX, Prosus, Flutter and Auto Trader as key outperformers and Evolution, CD Projekt and Eutelsat as our key underperforms. 5 new recommendations and 7 recent longer reports Within this note we downgrade Scout24 to Neutral reflecting relative valuation, CoStar risk and limited upside to earnings. In recent weeks we have downgraded Pearson, Entain and Eutelsat and upgraded UMG to Neutral. Elsewhere, we have published on key picks Prosus, RELX, agencies and WPP.
VIV VIV WPP PSON WKL PUB PUB REL UBI UBI SCHA SCHA INF SESG SESG TRI 888 ETL ETL 700 FLTR RMV CDR ENT AUTO EVO EVO G24 EMBRACB PRX SF SF BLV BCG UMG FLE LTMC
Q3 revenues grew globally by 3.1% yoy and lfl, in line with our expectations. The overall weaker performance compared to the Q2 was essentially due to Gameloft whose revenues decreased by 22% in Q3, due to an unfavourable comparison basis. There is little in this release to get excited about even if the Canal+ and Havas figures were rather good. We nonetheless remain at Buy on the stock as UMG is now back to its IPO price (of end 2021).
Vivendi reports stronger than expected organic revenue growth in Q3 Vivendi reported 3% organic revenue growth comfortably ahead of VA Consensus expectations of 1%. This performance was driven both by Canal + and Havas which more than offset strong double digit declines at Gameloft and Vivendi Village. Canal + accelerates to 5.4% growth in Q3 Canal + reported EUR1.5bn of revenues with 5.4% organic revenue growth driven by a solid performance in Mainland France (up 6.9%) helped by the deal with DAZN as well as very strong growth at Studio Canal (+24% in Q3 23). International TV was subdued at 0.5%. During the call management suggested that Studio Canal had a solid pipeline and would keep growing in coming quarters. Canal + is still in discussions with the French government on the VAT rate issue. Havas Media shows solid growth At 5.5% Havas organic revenue growth comfortably beat expectations. This strong performance was driven by 3% growth in North America, 1.5% in Europe and 51% in LatAm. Havas Media was particularly strong as it benefits from a broadening of its service offering (incl. data management). Not in a hurry to make strategic moves Management seems to have adopted a stronger focus on reshuffling its asset mix but is in no hurry to sell out of some its stakes. Management suggested that ''it would decide on UMG and TIM stakes in coming months''. No share buyback looks imminent but management is to reconsider its capital allocation policy after the second exercise of the Lagardere put option (15th of December). Neutral view maintained Vivendi''s core assets are reporting solid operating trends. A reshuffling of the asset mix could help lower the conglomerate discount. The stock continues to look cheap on our revised EPS. But top line growth trends are likely to slow down in Q4 and the timing and level of monetization of its many smaller assets and equity stakes is still uncertain. We remain Neutral.
A mixed H1 for Vivendi. A correct performance in terms of revenue with a clear acceleration for Havas but the growth in TV operations at Canal+ remains sluggish. Same thing for EBITA: a good performance for Havas whose margin improved but a disappointing one for Canal+ with a declining EBITA despite sales growth. We maintain our Buy on the stock given that Vivendi’s stake in UMG (c.€4.35bn), which represents c.45% of its market cap, still has some potential.
In the space of two years, Bolloré has completely reshuffled its portfolio from being a logistics giant industrial conglomerate to a media company, so to speak. After the sale of its historical logistics activities in Africa to the Italian shipowner MSC, it is now the balance of the logistics activities that are going to be taken off the table. While the proceeds of the previous operation were redistributed to shareholders, these could end up financing a Vivendi takeover.
In Q1 the group generated weak 1.1/1.2% growth at Canal+ and Havas. Given the nature of its assets post the UMG spin-off, Vivendi is currently more of a diversified holding company than a bona fide media stock. Its operational assets will deliver moderate growth and we must therefore remain cautious and not let ourselves get carried away by rumours surrounding a possible offer from Bolloré for all of the capital in the short or medium term.
Vivendi reported broadly in-line results Revenues came roughly in line with a revenue beat at Gameloft, Vivendi Village and Havas. On the positive side, we note the strong EBITA performance of the operating assets with Group EBITA beating consensus by 15%. However, due to an unfavourable change in Vivendi''s share of Telecom Italia''s net earnings, adjusted net income came 3% below consensus. The company expects antitrust complexities to come to a resolution soon We learnt that Vivendi received a statement of objections from the EU anti-trust authorities on the Lagardere takeover plan - Vivendi is to answer the EU Commission''s statements by March 15th. During the conference call, Vivendi Management highlighted that there is a ''continuing constructive dialogue'' with the European Commission and discussions with potential buyers of Editis with the aim of submitting a proposal around mid-March. Forecast changes We have excluded Editis from our forecasts which explains the change in our revenue forecasts and EBIT mix. elsewhere, we have increased our profitability expectations notably for Havas and Gameloft. We have also reflected the change in Telecom Italia treatment (no longer in equity affiliate, now accounted as a financial investment) and have updated our share count for the share cancellations occurred in January. Bottom line, we increase our 23e/24e EPS by 9% to reflect the above changes. We remain Neutral on Vivendi We update our SOTP and we increase our TP by 17% to reflect higher valuation of operating assets (Canal+, Havas) and an increase of 17% of the listed asset portfolio (including the increase stake in Multichoice). Although we recognize that the possibility of a Bollore Group takeout brings upside risk to the group''s implicit discount to NAV, we believe that it is not enough to turn positive on the name given regulatory uncertainty. We rate Vivendi Neutral.
After a disappointing performance in Q3 with flat revenues yoy and lfl, Vivendi posted a more solid Q4 with revenues up by 6.2% yoy and lfl. We maintain our opinion at Add on the stock mainly due to Vivendi’s stake in UMG (c.€4bn) which represents 36.5% of its market cap and still has some potential – which in our view is not really the case for Canal+ and Havas.
European Media performed broadly in line with a weak market in 2022 (-8%), although as usual of late, this masked major sub-sector divergence, with internet services and videogames weak and professional information and music relatively resilient. With interest rate expectations likely stabilising, macro uncertainty elevated and some structural growth narratives under challenge, we see stock picking as key in a very diverse sector, albeit with a skew towards ''quality'', reflecting our sub-sector preferences. Year ahead: 33 key debates for 11 sub-sectors With the media sector''s share price drivers now particularly heterogenous, we think a ''sector view'' is less relevant than perspectives by sub-sector. To that end, over 50+ pages in this note, we explore the 3 share price driver ''debates'' for the 11 sub-sectors in our coverage (Prosus, online classifieds, music, agencies, ad ecosystem, outdoor, professional information, Edtech, Events, satellites and videogames) with particular relevance for AUTO, UMG, PRX, RMV, G24, PUB and WPP. Key picks for 2023 We identify names from across our diverse sub-sectors. We highlight Prosus, Publicis, Informa and Auto Trader as key outperformers and Wolters Kluwer, CD Project and Stroeer as our key underperforms. 5 new recommendations and 8 major notes over the Christmas period In this report we double downgrade Stroeer to Underperform (see separate report) and downgrade Auto1 to Neutral. We also update TPs and forecasts across our coverage. Yesterday, we initiated on CD Projekt at Underperform alongside our review of the videogames sub-sector. In December, we downgraded Wolters Kluwer to UP and Pearson to Neutral, and flagged Informa as a key pick alongside a review of the Professional Information sub-sector. Finally, we published deep-dives on Tencent and Prosus late last year, where we still see upside despite the recent move.
VIV VIV WPP PSON WKL PUB PUB MMB MMB REL UBI UBI SCHA SCHA INF DEC DEC SESG SESG 700 RMV SAX CDR AUTO G24 ASCL EMBRACB ADE ADE PRX SF SF AG1 BLV BCG UMG
Vivendi reported revenues broadly in line with consensus Last week, Vivendi reported Q3 revenues broadly in line with consensus (we use the consensus from Visible Alpha and ZoneFinance). Canal revenues came 2% below, while Havas revenues came 2% ahead. One positive surprise was the strong performance of Gameloft with 48% organic growth in Q3 thanks to the success of the Disney Dreamlight Valley games (launched earlier in September) Comments on capital allocation On the call, the company outlined they are ''actively working to obtain the necessary authorization from the European Commission to finalize the Lagardere group transaction''. The plan to list Editis in 2023 is still on the agenda. Vivendi CFO Francois Laroze also highlighted there were ongoing discussions for MandA options at Canal+ (notably production assets in the US). No update on Telecom Italia was provided. Forecast changes After having been restricted on the name, we belatedly update our model. Our large EPS revisions are explained by the losses of affiliates, notably at Telecom Italia, while our BNPP Exane adjusted EBITA remains largely unchanged. We remain Neutral on Vivendi - TP cut to EUR9.4 (from EUR12.5) The shares are down 33% YTD, underperforming the market by 20%, indicative in our view of lower interest in the company post the UMG spin-off. While a lot of the risks associated with the cyclicality of the core operating businesses are well understood, we would keep an eye on some of the potential downside risks (Canal+ VAT increase, underperformance of Havas versus Top4 ad agency etc). We believe the possibility of a Bollore Group takeout brings upside risk to the group''s implicit discount to NAV, but it is not enough in our view to turn positive on the name. We rate Vivendi Neutral with a revised TP of EUR9.4 as we have updated our SOTP for the impact of the latest corporate changes (UMG spin, Multichoice and Lagardere stake).
After a solid Q1 and a modest Q2, Vivendi posted a disappointing performance in Q3 with flat revenues yoy and lfl. With a revenue decline of 3.5% yoy and lfl in Q3 in France, the current trend at Canal+ is worrying. We will revise downwards our estimates for 2022-23.
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