When the going gets tough
Roularta reprted a weak set of 1H17 results (net profit down 90%), reflecting pressure on Belgian advertising revenues in Print Media and TV broadcasting. However, cash flow is resilient (operating cash flow -10%) and the group's leading market share is not at risk. Our EPS forecasts have been cut by 63%, 50% and 53% for 2017e, 2018e and 2019e respectively to take into account the weak ad spend environment and further margin pressure. Our fair equity value is set at €17.3/share, in line with the current share price, down from €23.1/share previously, based on our sum of the parts model, which points to 2018e P/E and EV/EBIT multiples of 20x and 10x respectively (based on combined accounts).
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