GROWTH OR SPE­CIAL DIV­I­DEND?

Finweek English Edition - - Companies & markets - BELINDA AN­DER­SON

AFRICAN ME­DIA EN­TER­TAIN­MENT (AME) is the only pure ra­dio sta­tion-ow­ing com­pany on the JSE and of­fers some ex­cit­ing pos­si­bil­i­ties go­ing for­ward – though those could still take some time. What’s more, the share is thinly traded – so in­vestors who wanted to ac­cu­mu­late a stake might bat­tle.

AME could buy Nail’s 24,9% stake in Kaya FM, giv­ing it a foot­print in the Gaut­eng ra­dio mar­ket to add to its pres­ence in the East­ern Cape with Al­goa FM and in the Free State with OFM. That’s if the Com­pe­ti­tion Ap­peal Court finds in its favour and pre­vents Pri­me­dia from buy­ing that stake. AME has also sub­mit­ted an ap­pli­ca­tion to reg­u­la­tor Icasa for a li­cence in Mpumalanga.

The com­pany gen­er­ated R31,5m in cash dur­ing its fi­nan­cial year end­ing Oc­to­ber 2006 and had R23,8m at year-end – money that it was re­tain­ing for the two po­ten­tial op­por­tu­ni­ties. How­ever, if those weren’t suc­cess­ful, AME said it would dis­trib­ute the cash to share­hold­ers.

AME re­ported op­er­at­ing profit of R29,7m (up 30%) on rev­enue growth of 18% to R101,7m last year. Earn­ings of 209,3c/share put the com­pany on a his­toric price:earn­ings ra­tio of nearly 12 times. OP­POR­TU­NI­TIES Fur­ther growth in ex­ist­ing ra­dio as­sets and sales house United Sta­tions, which re­cently added ad­di­tional clients. • Could add two more ra­dio as­sets to its port­fo­lio. RISKS Op­por­tu­ni­ties could take some time to ma­te­ri­alise. And nei­ther may come off.

AFRICAN ME­DIA EN­TER­TAIN­MENT

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