Mediaset España has enjoyed a stronger ad-performance in its Q2 trading, albeit from a low set of challenges.
There was a 13.6 per cent overall decline for the Spanish ad-market in Q1, but Q2 bounced back up 80 per cent taking the overall 1H to a 22.8 per cent growth. Mediaset España benefitted from that improvement with 83.4 per cent growth in Q2.
A note to investors from Berenberg Bank says that Covid was still being felt in Spanish television production, stating: “While advertising sowed a strong recovery, the effects of the Covid-19 pandemic continue to be felt in the production business (on which ITV has also commented) as well as in cinema distribution. We believe that this should normalise over the course of the second half; indeed, the company released its first film of 2021 at the end of June, so some benefit should already be felt in Q3. The y-o-y impact of the end of football rights distribution (which will normalise in H2) also affected other revenues, such that overall this line item was down by 39 percent in Q2, taking H1 to a decline of 41 percent. In H2, however, we expect a moderate increase such that, while this implies a full-year decline in FY 2021, we expect modest growth from FY 2022.”
The bank continued: “Advertising [is] set fair in July and August: With the recovery reflecting the recovery of consumer optimism, and the return of footfall to the streets, the latter half of Q2 was much stronger than the first half (football aside). That momentum has continued into July and August, according to management, with TV advertising spend above 2019 levels. This suggests that there may be modest upside to our estimates, although we note that both are small months, from a commercial perspective, and thus the acid test of recovery will be September through to December, which face undoubtedly tougher comparables. Overall, we hold our estimates broadly unchanged for the year, on which basis we continue to find the stock absurdly cheap.”
Berenberg retains its ‘BUY’ rating on Mediaset Spain.