Why Domain and Nine Entertainment Share Prices are Up

Domain Holdings Australia Ltd [ASX:DHG] has surged upward 21.77%, with the release of their half year results this morning. Despite a difficult few months in the real estate market, it comes as a positive sign for the company.

The property platform’s share price is sitting at $2.54, at time of writing.

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What Domain reported:

Domain was one of the best performers on the ASX today, with the release of their positive half year results. Domain’s new CEO, Jason Pellegrino, described the results as surprisingly ‘solid’, despite what he called a ‘challenging’ housing market.

In their release to the ASX, Domain reported an increase in revenue growth by 0.3% to $183.9 million. They reported their EBITDA (earnings before interest, tax, depreciation and amortization) to be down by 7.1% to $52.7 million, and their net profit to fall by 14.2%, down to $21.1 million.

The property portal company additionally showed a net loss of $156.4 million, including a goodwill impairment of $178.8 million.

The value of its goodwill was due to the lower listing environment experienced across the country in the last 12 months.

It’s not surprising that Domain has had a difficult few months in the volatile economic environment Australia has experienced — especially with properties in Melbourne and Sydney.

Sydney experienced a 1.3% drop in their house prices in January, and a 9.7% decline over the last 12 months. Melbourne had an even more severe drop last month of 1.6%, and over the last year they dropped by 8.3%.

But despite revealing multiple losses, the company insisted that the results were still ‘in line with market expectations’.

Mr Pellegrino said, ‘today’s results are testament to Domain’s strong fundamentals and competitive strength as a leading Australia property technology and services business.

What Nine reported:

With a 60% stake in Domain, Nine Entertainment Co Holdings Ltd [ASX:NEC] is up 8.09% today, their share price sitting at $1.50 apiece.

The merger of Fairfax Media and Nine last year was considered to be an exciting improvement for the company, in terms of the considerable marketing and audience boost it gave Domain.

Domain reported that their major sponsorship of The Block on Channel Nine gave the property platform great brand exposure to a TV audience of over 14 million — with the show being #1 in its timeslot for all key demographics.

Additionally, being a Platinum Partner of Cricket Australia’s Men’s Domestic Test Cricket exposed them to a broadcast audience of 10.4 million nationwide.

Pellegrino commented on this merger in the half-year results presentation, saying ‘we are excited by the merger…and the considerable marketing and audience boost it provides to our business’.

What’s next for the company?

According to ABC News, Tim Lawless, CoreLogic’s Head of Research has warned that negative property prices are here to stay.

This is the new normal. Tight credit conditions, weakening consumer sentiment, less domestic and foreign investment and higher levels of housing supply are the primary drivers of the worsening conditions.’

And now with the release of the Banking Royal Commission report last week, these prices are expected to drop even lower.

REA Group Limited‘s [ASX:REA] share price has recently been impacted by the slowing housing market.

So, Domain’s future remains fairly uncertain. If it can continue to buck the trend, we would be highly impressed.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is one of Money Morning’s junior analysts. Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects. Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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