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Why the HT&E Ltd share price is soaring this week

Media, entertainment and technology company HT&E Ltd (ASX: HT1) is at the top of the S&P/ASX 200 gains today with a whopping 11.54% increase in share price to $1.74 on the back of its release of solid results for FY17.

Formerly APN News and Media Limited, HT&E Ltd controls a portfolio of assets across Australia, New Zealand and Hong Kong including Australia’s top metropolitan radio network.

HT&E’s FY17 pro forma results show group revenue up 3% to $472.3 million and EBITDA up 1% to $118.4 million – in line with guidance, with expectations for strong performances for the first half of 2018.

Operationally HT&E has maintained the number one in metropolitan ratings for its Australian Radio Network (ARN) business, although ARN revenue came in down 1% with EBITDA down 3%.

Other downgrades include a forecast for first-half 2018 ARN revenue to drop 6%, with EBITDA for the same period down 17%, but second-half expectations are back up for ARN in the realm of a 5% rise in revenue and a 9% rise in EBITDA for the same period.

HT&E cited innovation in their digital street furniture network Adshel, which took a hit when it lost long-term customer Yarra Trams late last year.

But Adshel is since said to have secured or renewed several sizable contracts, with strengthened data insights and new trading packages.

Adshel revenue and EBITDA were up 7.5% and 11.3% respectively, but the fourth-quarter was impacted by the Yarra Trams loss, resulting in a $163 million impairment of goodwill and other intangibles.

The HT&E share price has been on a downward slide for the best part of 12 months, and was sitting about 35% higher at $2.65 this time last year.

The HT&E share price plunged to its biggest low since mid-2014 in November last year when it hit $1.59, after Yarra Trams failed to renew its contract for Melbourne tram network advertising, with HT&E flagging a dent to its annual earnings of about $15 million, but results show the network revenue impact should be “slightly less” than this estimate thanks to a mitigation strategy.

This strategy will no doubt be assisted by the 7-year outdoor advertising deal Adshel struck with Metro Trains Melbourne, which comes into play in April and will see the roll out of 150 new screens to bring the Adshel total to more than 300 screens in New Zealand and more than 750 across Australia.

Analysts have named HT&E as having an “adequate” balance sheet with a proven track record, something clearly proven in today’s release of results.

2017 was the first year HT&E operated its core radio and outdoor assets as a 100%-owned business with Chairman Peter Cosgrove saying 2018 is all about “delivery and operational focus driving EBITDA” to yield better value for shareholders.

HT&E has declared a fully-franked full year dividend of 4 cents, with an ex-dividend date of 29 March and payable on 26 April.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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