Nine (ASX:NEC) share price on watch as profit doubles

Media giant boosts dividend after reporting very positive half-year numbers. How will ASX investors react?

ASX share price on watch represented by surprised man with binoculars

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Nine Entertainment Co Holdings Ltd (ASX: NEC) has more than doubled its profit for the half-year ending 30 December.

The media company reported on Wednesday morning it raked in $181.9 million of consolidated net profit after tax, compared to $87.3 million the year before.

The positive result in a half-year affected by COVID-19 meant Nine has decided to give out an interim dividend of 5 cents per share fully franked.

This restores the dividend payout back to pre-pandemic levels.

Dividend ex-date Type Amount Franking
4.3.2021 Interim 5 cents 100%
9.9.2020 Final 2 cents 100%
5.3.2020 Interim 5 cents 100%
26.9.2019 Final 5 cents 100%
5.3.2019 Interim 5 cents 100%
Table created by the author

The share price for the publishing giant will be keenly watched as the ASX opens trade on Wednesday morning. The stock closed Tuesday down 0.37% to trade at $2.67.

Just last week Macquarie Group Ltd (ASX: MQG) analysts upgraded their share price target for Nine to $3.80. That's a healthy 42% return from the current level.

Nine was one of the best-performing media stocks on the ASX last year, gaining 29% for the calendar year.

Despite the profit upgrade, Nine's revenue from continuing operations actually fell 3% from the previous year.

However, earnings before interest, tax, depreciation and amortisation (EBITDA) for continuing operations rose 42% and its cash flow also improved more than 91%.

The company performed well during a volatile time and has "come out the other side in a very strong position", according to chief executive Hugh Marks. 

"The advertising market clearly turned in late September — earlier and more sharply than we had anticipated," he said.

"Nine's consistently strong audience performance, across all of our platforms, means we are well-positioned to benefit from this improvement in the ad cycle."

A busy half-year for Nine 

Big events during the half-year included the relocation of its headquarters from the historic Willoughby site in northern Sydney to a brand new skyscraper in North Sydney.

The company also signed a revenue-sharing agreement with Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)'s Google for new content provided to the digital platform.

Nine's own newspapers also reported Wednesday that negotiations had been re-opened with Facebook Inc (NASDAQ: FB) following the social media giant's reversal of its Australia news ban.

There is also a chief executive transition in place. Current boss, Marks resigned from the position in November after revealing a relationship with the former managing director of commercial, Alexi Baker. He is staying on until a replacement is found.

"I've had a great 5 years at Nine, and am confident that I am handing over the reins at the perfect time," Marks said Wednesday. 

The company's streaming service, Stan, also secured the rights to broadcast rugby union, with new brand Stan Sport launching last month.

With a big profit boost to show off, Nine will return JobKeeper payments received for all wholly owned subsidiaries. This amounts to about $2 million.

In total, it has received about $8.4 million of the government subsidy, with the vast majority ($6.5 million) going to its real estate classified business Domain Holdings Australia Ltd (ASX: DHG).

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Tony Yoo owns shares of Macquarie Group Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (C shares) and Facebook. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Alphabet (C shares) and Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A young couple sits at their kitchen table looking at documents with a laptop open in front of them.
Opinions

Why I'd buy these top ASX 200 shares next

Growing businesses are compelling. These two are growing significantly.

Read more »

Smiling man with phone in wheelchair watching stocks and trends on computer
Share Market News

5 things to watch on the ASX 200 on Tuesday

A much better session is expected for Aussie investors today.

Read more »

Unsure man analysing data on laptop.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors had a rough start to the week this Monday.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Broker Notes

Guess which popular ASX 200 stock Bell Potter just downgraded

Let's see what the broker is saying on this blue chip.

Read more »

Crude oil barrels rocketing.
ETFs

Why did the BetaShares Crude Oil ETF just spike 4%?

This ETF is attracting buyers in today's seller's market.

Read more »

A male sharemarket analyst sits at his desk looking intently at his laptop with two other monitors next to him showing stock price movements
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

Woman with an amazed expression has her hands and arms out with a laptop in front of her.
Share Gainers

Why BWP, Metcash, Resolute Mining, and SHAPE shares are pushing higher today

These shares are starting the week on a positive note. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Adairs, ANZ, Aurelia Metals, and Pilbara Minerals shares are falling today

These shares are having a tough start to the week in the red. But why?

Read more »