Companies: APA    DOM   

Charles Stanley takes a bullish stance on television and music producer Apace Media, which has placed its Eastern European broadcasting assets into a joint venture and sold a 50 per cent stake to a Swedish company with a ‘great’ track record in the region. Apace is valued at less than £17 million, but the deal values the Eastern European assets at £12 million. The transaction provides a very healthy cash balance, de-risks the business and ‘demonstrates a real value for the assets and a potential buyer eventually of its remaining stake’. The broker has cut its profit forecast for 2007 by 9.6 per cent to £1.25 million. However, it believes the company should command a £20 million valuation, which ‘equates to 22.5p per share’.

Over in the leisure sector, Domino’s Pizza is considered another wrongly priced venture. The franchise continues to be popular – 50 new openings a year are still being targeted and the group is consistently managing to grow its like-for-like sales. Strong LFL sales growth in 2006 has been surpassed by a 14.3 per cent improvement in the first six weeks of the new financial year.

As future performance relies on such growth, ‘the primary risk to its growth plans is the prospect of local authority planning approval processes becoming even stricter’, but the broker is confident the chain has the experience to ‘ensure that its pipeline of new sites can support the new site openings’. Confident earnings will be ‘moving up in the near future’, clients are urged to add to their holdings.