Bank: “NENT growth very encouraging”

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Nordic Entertainment Group’s (NENT) Q3 numbers made headlines in themselves. Now NENT’s performance has received a more detailed overview from equity analysts at investment bank Berenberg.

NENT’s revenues of SEK3,054 million (€305.7m) were in line with consensus estimates, whereas EBIT of SEK114 million was ahead of expectations. Viaplay revenues were slightly short of expectations despite the addition of 322,000 subscribers. This was primarily due to Nordic subscriber growth (36,000) underperforming expectations, while international subscriber growth (286,000) was streets ahead of consensus’s 191,000.

“Given the nascency of the Polish launch – which constituted the vast majority of international subscriber growth – the ARPU is significantly lower than in the Nordics, hence a slight shortfall in revenues. That said, the international growth is very encouraging with regards to the long-term equity story for NENT,” says the bank.

“While the international subscriber base is not reported on a market-by-market basis, we know that the vast majority of the 286,000 international subscriber growth for Q3 came from a successful launch in Poland – driven by the sports (primarily the Bundesliga) content,” suggests the bank’s report.

“While this is not yet reflected in the top line, it should certainly reassure investors that NENT is executing well on the international expansion. Management refrained from increasing the 500,000 international subscriber outlook for FY/2021 (at 313,000 as of Q3) citing the possibility of a slowdown in Poland after such a successful launch. Likewise, we leave our FY/2021 estimate at 535,000, but believe the risk is now very much tilted to the upside,” says Berenberg.

“Viaplay will be rolled out in the Netherlands in Q1/2022 and management claimed at Q3 results that details of launch date, price point and B2B partners will be communicated before Christmas. The launch date is likely to be well before the start of the F1 season on 20 March and given (unfounded) rumours in the Netherlands of price points similar to that of the Nordic sports package, we expect the announcement of a more reasonable – given the strong content slate – subscription cost to improve perception in the Dutch market, where we expect a successful first year for Viaplay: we forecast 937,000 Dutch subscribers in FY22,” adds the bank.

“Nordic Viaplay set for strong Q4: While 36,000 net new subscribers for Q3 fell short of consensus numbers, management reiterated that this reflects a return to normal seasonal patterns and the platform is on track to meet the 400,000 FY/2021 outlook, which would imply 124,000 subscriber growth in Q4 – we forecast 140,000, particularly with the launch of the FIS winter sports in November likely to boost growth and ARPU through increased D2C and sports subscriptions within the mix,” concludes the bank.


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