About: APN News & Media, an Australian and New Zealand media company, was re-branded Here, There & Everywhere (HT&E) in May 2017. Its divisions include broadcast radio (KIIS, Pure Gold, The Edge), outdoor advertising and digital/content marketing (The Roar).

Why it’s in the portfolio: HT1 provides the portfolio with exposure to the stream of revenues that comes from radio and outdoors advertising. The company has sold its legacy Australian regional newspapers in 2016 and has restructured itself around radio and more modern media operations such as content creation and marketing. It has also acquired the remaining 50% of Adshel, an outdoor advertising company that specialises in digital displays, consumer research and geo-targeting solutions.

Fundamentals: HT1 currently trades on a price-to-earnings ratio of around 11.5x forward earnings, and a price-to-book ratio of just over 1x. HT1 currently offers a 3% dividend yield, and a dividend payout ratio of around 45%. At 12%, HT1’s level of debt relative to assets is considered to be low.

What could go wrong? Given its recent restructure, the company hasn’t existed in its current form for very long and its strategy is therefore untested. The investment case rests partially on HT1’s ability to grow. While the ongoing conversion of static to digital outdoor displays will continue to contribute to that growth, HT1’s radio division has shown recent signs of weakening. HT1 also has overseas operations (outdoor advertising in Hong Kong) that are struggling. Furthermore, HT1 has indicated that it is looking to acquire more assets, which raises questions of successful integration down the line and debt levels in the more immediate future.