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Bank: “VIaplay maintains momentum”

April 28, 2022

A report from investment bank Berenberg on NENT Group and its Viaplay service maintains its ‘BUY’ advice to investors.

The bank, however, says there were slight shortfalls from NENT’s Advertising and Other Subscription segments in its last set of results, which meant that group net sales of SEK2.34 billion (€0.23bn) fell 2.3 per cent short of consensus.

“Subscriber additions for the International segment were among the biggest positives from the Q1 results, well ahead of consensus, which had already been raised from 200k to 500k in the lead-up to results. This was almost entirely driven by the strength of the launch in the Netherlands on 1 March,” said Berenberg.

“However, management decided that, given the nascency of the Dutch platform, it is too early to raise its FY 2022 outlook for International subscriber additions of c1.65 million – implying c990k new subscribers over the next three quarters. Nonetheless, with commentary suggesting that momentum in the Netherlands has remained solid in April, and with NENT acquiring the English Premier League (EPL) rights in Poland and the Netherlands in August, we still think the outlook is too low (our forecasts imply c2m net adds in FY 2022), and likely to be raised, probably at the Q2 results,” added the bank’s report.

The Tele2 deal was “neutral” in FY 2022. “In our previous note, we outlined our thoughts on the Tele2 deal and what it could mean for revenue and margins – although we did not bake this into our numbers. Management has now confirmed that the deal should add 500,000 subscribers and has raised its FY 2022 Nordic outlook accordingly, but the revenue and EBIT outlook is unchanged, with Viaplay net sales likely to be higher, but Other Subscription likely to be lower, given reallocation of revenues from existing agreements with Tele2,” said the report.

NENT’s progress, and the underlying momentum, belies Netflix’s ‘read across’.

“The 500k increase to the FY 2022 Nordic subscriber outlook due to the Tele2 deal implies that the underlying growth assumptions for the Nordics are unchanged despite concerns about the negative read across from Netflix’s assumption that it will lose subscribers in Q2. The impact that the Netflix issues does have on our valuation is through our peer multiple valuation for the Viaplay segments within our sum-of-the-parts (SOTP). Having updated our peer multiples, our price target falls to SEK490, with a significant differential between our SOTP and DCF-derived fair values of cSEK350 and cSEK640 respectively,” concluded the bank.

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