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Future — Stateside opportunity

Future — Stateside opportunity

Future’s capital markets day (CMD) focused on its opportunity to grow brand reach globally, together with demonstrating the scalability of its platform to deliver that growth. There are particularly attractive prospects in the US market, where media revenue per online user is significantly less than it is in the UK. Our forecasts are unchanged at this point, but the emphasis on closing this revenue gap points to further strong growth potential. Management has an impressive M&A record, adding assets and driving returns on the brands. Progress has been reflected in the strong share price performance, but we still consider that the current rating does not fully reflect the opportunity.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

Future

Stateside opportunity

Capital markets day

Media

8 February 2018

Price

395p

Market cap

£181m

Net debt (£m) as at 30 September 2017

10.0

Shares in issue

45.7m

Free float

99.5%

Code

FUTR

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(4.8)

8.5

118.2

Rel (local)

1.0

12.0

113.3

52-week high/low

430.00p

159.13p

Business description

Future is an international media group and leading digital publisher, with a scalable platform and a range of leading consumer brands. It operates two separately managed, brand-led divisions: Media and Magazine.

Next events

AGM

February 2018

H118 trading update

April 2018

Analysts

Fiona Orford-Williams

+44 (0)20 3077 5739

Bridie Barrett

+44 (0)20 3077 5700

Future is a research client of Edison Investment Research Limited

Future’s capital markets day (CMD) focused on its opportunity to grow brand reach globally, together with demonstrating the scalability of its platform to deliver that growth. There are particularly attractive prospects in the US market, where media revenue per online user is significantly less than it is in the UK. Our forecasts are unchanged at this point, but the emphasis on closing this revenue gap points to further strong growth potential. Management has an impressive M&A record, adding assets and driving returns on the brands. Progress has been reflected in the strong share price performance, but we still consider that the current rating does not fully reflect the opportunity.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

09/16

59.0

2.3

9.2

0.0

42.9

N/A

09/17

84.4

8.3

21.0

0.0

18.8

N/A

09/18e

91.4

13.6

22.1

0.5

17.9

0.1

09/19e

92.1

14.6

23.1

1.0

17.1

0.3

Note: *PBT and EPS are normalised and fully diluted, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Narrowing the revenue gap

The CMD covered in some detail the technology infrastructure that the group has put in place to support the expansionary strategy. Operational management also outlined the ways that the group’s content is tailored to satisfy the requirements of demanding audiences and to deliver commercial revenue streams in advertising and in e-commerce. Adding e-commerce is accelerating the financial return on the Home Interest portfolio purchased in July 2017. The greatest opportunity, though, is in building up US e-commerce revenues. Future’s brands reach a global online audience of 57m, of whom 40% are in the US. However, the region only represented around 16% of group revenue in FY17. Media revenue per online user in the US of £0.73 is a long way short of the £1.79 earned in the UK.

Fast integrations, strong cash discipline

Our outlook note (November 2017) examined recent acquisitions, highlighting how quickly they have been integrated. The disciplines established for bringing acquired businesses across onto Future’s strengthened tech stack are now well established and allow additional monetisation channels to be operational and contributing to earnings at an early stage. With the heavy lifting on systems complete, and with the changing revenue mix, the cash profile is strengthening. Our model indicates Future moving into net cash (barring acquisitions) by end FY19.

Valuation: Further upside potential

The shares have performed strongly, more than doubling over the last year, as the implementation of management’s strategy has translated into good financial performance. Although our forecasts are not being reviewed at this juncture, it is clear that there is good momentum behind rolling out best practice in e-commerce globally, which should then come through in the financial returns.

Global potential

Future concentrates on areas of content that have appeal well beyond its original territories. Consumers worldwide are interested in the same mobile phones, gaming, consumer tech and music. Future’s portfolio of brands is already reaching a global audience, with online users numbering 24m in the US and Canada, 10m in the UK, a further 10m across the rest of Europe, 8m in Asia, 3m in Australia and New Zealand and 1m in each of South America and Africa. In the UK and US, around half of those users are under the age of 35, with a ratio of males:females of about 1.6x, making this a very attractive cohort for advertisers.

Future’s headcount is concentrated in the most efficient location, the UK, with the IT developers based in Bath (where they cost around half of the level that they would in San Francisco) and telesales based in Bromsgrove. There are customer-facing offices in the US and Australia to make sure that the organisation stays close to its user and client bases.

Improving the underlying tech

The group has assembled a robust tech stack, with a web platform that includes content management system, content localisation and automated content tagging, as well as a content commissioning portal that facilitates content re-use, an asset storage system and a magazine platform. It has also built an ad Tech platform that results in significantly higher levels of viewability (the average across the portfolio has risen from around 40% in December 2016 to 68% currently) and in a substantial uplift in the number of impressions, as well as in the achieved margin per campaign. With programmatic header bidding, the number of SSP (supply side platform) partners has risen from two to 11 and CPMs (cost per 1,000 impressions) have increased by 175% on the level in June 2106. The group’s Hawk e-commerce platform is constantly expanding its product database, with a very high match rate (87% of automated matches are successful).

Grasping the US opportunity

Programmatic advertising and Hawk are particularly important if the commercial opportunity in the US is to be grasped. As stated above, £0.73 is earned per online user in the US compared with £1.79 in the UK. It is both the advertising and the e-commerce piece that will help to close that gap, but the latter can earn more than double per page view than the advertising component. It is obviously important that the platform gives a smooth customer experience as well as providing the retail partners a further, efficient route to market.

Future has grown its retail partner base to 7,285 globally, with a database of over 250m products. Hawk has been built to allow new retailers to be added easily, which will be important with the scaling up in the US. It earns revenue when a customer clicks through and completes a successful transaction. Commission levels are negotiated retailer by retailer and leads are matched with local and global retailers. Amazon is obviously a key partner, given its dominance in e-commerce worldwide and Future also has a key relationship with eBay, given that its consumers will not always be looking for new product. However, with much of the driving content being targeted at specialists and particular interest groups, specialist retailers are a very important part of the mix.

The data derived from the 57m monthly unique users and their clickstreams is of itself a very valuable piece of IP, which is used to guide content creation as well as improving conversion rates.

While it is very tempting to mechanistically calculate the impact of closing the US/UK gap and add it in to top line forecasts, we regard it as giving strong support to the estimates with potential for further upside.

Not just the US

With the infrastructure in place, and content that it is relevant globally, there are obviously good opportunities to generate diverse revenue streams in many other territories. This does not have to be direct, but could be via strategic partnerships, such as that in India, with Times of India, which licenses platform and content from Future in SaaS form.

As described above, the web platform allows for online multi-language content creation and enables the content to be localised for particular markets, opening up a new commercial proposition for advertisers.

Adding to the mix

As well as driving the digital revenue streams harder, Future is also likely to continue to grow through acquisition, adding brands and verticals that can be ‘plugged in’ to their systems and platforms along what is becoming a well-trodden route. It currently operates in seven verticals and with over 90 brands. Having a range of verticals provides an element of portfolio effect as they move through different cycles.

Brands proliferation is not such an issue when dealing with audiences of enthusiasts, who may well be reluctant to ‘share’ with even slightly different interest groups. Future has a good record in working on improving search rankings and discoverability. Where assets are available in magazine format, they can be readily assimilated and websites launched on short time scales measured in weeks rather than months. The acquisition of Home Interest during 2016 has added to existing group expertise in running events, building another key revenue stream which may be applicable to other brands and verticals coming into the group.


Exhibit 1: Financial summary

£'m

2015

2016

2017

2018e

2019e

30 September

IFRS

IFRS

IRFS

IRFS

IRFS

INCOME STATEMENT

Revenue

 

 

59.8

59.0

84.4

91.4

92.1

Cost of Sales

(40.6)

(16.0)

(23.4)

(23.2)

(21.6)

Gross Profit

19.2

43.0

61.0

68.2

70.5

EBITDA

 

 

3.6

5.2

11.0

16.7

17.9

Operating profit (before except.)

 

 

0.8

2.8

8.9

14.2

15.0

Amortisation on acquired intangibles

(2.3)

0.0

(2.3)

(6.2)

(6.2)

Exceptionals

(2.5)

(16.5)

(3.7)

(1.0)

0.0

Share-based payments

0.0

(0.5)

(2.1)

(2.5)

(2.5)

Reported operating profit

(4.0)

(14.2)

0.8

4.5

6.3

Net Interest

(0.6)

(0.5)

(0.6)

(0.6)

(0.5)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

Profit before tax (norm)

 

 

0.2

2.3

8.3

13.6

14.6

Profit before tax (reported)

 

 

(2.3)

(14.9)

0.2

3.9

5.9

Reported tax

0.3

0.5

1.4

(1.9)

(1.1)

Profit after tax (norm)

0.5

2.3

8.6

11.0

11.8

Profit after tax (reported)

(2.0)

(14.4)

1.6

2.0

4.8

Minority interests

0.0

0.0

0.0

0.0

0.0

Discontinued operations

0.7

0.2

0.0

0.0

0.0

Net income (normalised)

0.6

2.3

8.6

11.0

11.8

Net income (reported)

(1.3)

(14.2)

1.6

2.0

4.8

Basic average number of shares outstanding (m)

22

24

37

46

47

EPS - basic normalised (p)

 

 

2.7

9.5

23.2

24.2

25.4

EPS - normalised, fully diluted (p)

 

 

2.7

9.2

21.0

22.1

23.1

EPS - basic reported (p)

 

 

(5.9)

(58.8)

4.3

4.3

10.2

Dividend per share (p)

0.0

0.0

0.0

0.5

1.0

Revenue growth (%)

(9.4)

(1.3)

43.1

8.3

0.7

Gross margin (%)

32.1

72.9

72.3

74.6

76.6

EBITDA margin (%)

6.0

8.8

13.0

18.3

19.5

Normalised operating margin (%)

1.3

4.7

10.5

15.6

16.3

BALANCE SHEET

Fixed assets

 

 

44.9

36.1

97.9

92.2

86.1

Intangible assets

43.8

33.2

92.3

85.6

78.5

Tangible assets

0.6

0.5

1.0

2.0

3.0

Investments & other

0.5

2.4

4.4

5.4

4.4

Current assets

 

 

19.5

15.8

24.5

30.0

40.2

Stocks

0.5

0.4

0.7

0.7

0.7

Debtors

15.3

12.4

13.6

16.0

18.4

Cash & cash equivalents

2.5

2.9

10.1

13.2

21.0

Other

1.2

0.1

0.1

0.1

0.1

Current liabilities

 

 

(25.9)

(25.1)

(36.4)

(37.0)

(37.6)

Creditors

(20.7)

(21.4)

(29.9)

(30.5)

(31.1)

Tax and social security

(0.9)

(1.4)

(3.2)

(3.2)

(3.2)

Short-term borrowings

(4.3)

(2.3)

(3.2)

(3.2)

(3.2)

Other

0.0

0.0

(0.1)

(0.1)

(0.1)

Long-term liabilities

 

 

(7.1)

(5.6)

(24.7)

(19.4)

(16.0)

Long-term borrowings

0.0

(0.1)

(16.9)

(14.3)

(10.9)

Other long-term liabilities

(7.1)

(5.5)

(7.8)

(5.1)

(5.1)

Net assets

 

 

31.4

21.2

61.3

65.8

72.7

Minority interests

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

31.4

21.2

61.3

65.8

72.7

CASH FLOW

Operating cash flow before WC and tax

0.8

5.2

11.0

16.7

17.9

Working capital

(8.0)

(2.1)

4.7

(1.8)

(1.8)

Exceptional & other

(0.4)

0.0

(3.7)

(1.0)

0.0

Tax

(0.5)

(0.7)

(1.4)

(4.6)

(1.1)

Net operating cash flow

 

 

(8.1)

2.4

10.6

9.3

15.0

Capex

(2.0)

(2.5)

(2.6)

(3.0)

(3.0)

Acquisitions/disposals

1.3

(0.3)

(31.8)

0.0

0.0

Net interest

(0.6)

(0.4)

(0.6)

(0.6)

(0.5)

Equity financing

0.0

3.1

21.0

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

(0.4)

Other

0.0

(0.1)

0.2

0.0

0.0

Net cash flow

(9.4)

2.2

(3.2)

5.7

11.2

Opening net debt/(cash)

 

 

(7.5)

1.8

(0.5)

10.0

4.3

FX

0.1

0.1

0.0

0.0

0.1

Other non-cash movements

0.0

0.0

(7.3)

0.0

0.0

Closing net debt/(cash)

 

 

1.8

(0.5)

10.0

4.3

(7.0)

Source: Company accounts, Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Future and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Future and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Senex Energy — Entrusted East Coast gas supplier

Senex has a diverse portfolio of conventional and unconventional oil and gas assets in Australia’s Cooper and Surat Basins. Its growing portfolio of projects is well placed to deliver new gas to meet the shortfall along Australia’s East Coast. Projects are underpinned by existing recoverable gas resources and robust demand. Consensus expects continued growth in Senex’s underlying oil business, with revenues enhanced by a rising oil price, with gas sales from two projects in Queensland (Western Surat Gas Project and Project Atlas) driving a step change in production. We note that the consensus valuation of A$0.41/share (Bloomberg average) heavily risks the NPV of Senex’s development portfolio and compares to an unrisked consensus NPV of A$1.18/share.*

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