GROWTH OR SPECIAL DIVIDEND?
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.