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New CEO to unveil strategy plans in coming months
Thursday 06 Oct 2016 Author: Tom Sieber

Newspaper publisher and information services provider Daily Mail & General Trust (DMGT) looks attractive as it moves from investment phase to delivery phase.

Buy ahead of full year results on 1 December 2016 which should see chief executive Paul Zwillenberg update on efforts to streamline the business and make it more efficient.


The shares look fairly cheap on 12.2 times forecast earnings for the year to September 2018. Admittedly there is a slight discount priced in to its valuation from the ongoing decline in print advertising.

Casual followers of the stock might only be aware of its higher profile DMG Media division which encompasses the Daily Mail, Mail on Sunday and Metro newspapers as well as the more salacious MailOnline site.

Although this division represented nearly 40% of revenue in the year to September 2015, there is a lot more to the business than this traditional news element.

Rough calculations suggest its stakes in B2B publisher Euromoney Institutional Investor (ERM) (67%) and online property portal Zoopla (ZPLA) (31%) are worth around £1.4bn at current market prices and account for more than half the media group’s total market cap on their own.

Investec suggests Daily Mail & General Trust could get more than £600m if it sold its stake in Zoopla and offloaded US software arm Hobsons.

The company also has its RMS insurance risk modelling product, its DMG Information arm serving the property, education and energy sectors and an events division which operates exhibitions in industries such as construction, interiors and hotels and hospitality. On a sum-of-the-parts basis Panmure Gordon values the group at 920p per share – significantly above the current market price of 750p.

Delivery focus

Zwillenberg was appointed in May 2016 and has a background in digital media. He most recently headed up the media side of multi-national consultancy firm Boston Consulting Group.

He has outlined an ambition to deliver on the revenue and profit potential of the portfolio, given the group has already invested heavily in areas such as RMS and MailOnline in recent years.

The company last month said it would increase a restructuring charge from £15m to £50m.

Given how the company’s fortunes are heavily tied to Euromoney, it was encouraging to hear star fund manager Nick Train singing the latter’s praises at a recent conference in London.

Train pointed to its excellent track record in terms of cash conversion and said this is why he had stuck with the publisher of Metal Bulletin and Institutional Investor despite a downturn in its core investment banking and commodities markets. (TS)

Daily Mail & General Trust (DMGT) 750p

Stop loss: 600p

Market value: £2.6bn

Prospective PE Sept 2017: 13.5

Prospective PE Sept 2018: 12.2

Prospective dividend yield Sept 2017: 3.0%

Bid/offer spread: 0.42%

Analyst price target: 850p*

*Panmure Gordon, 30 September 2016

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