Investor Wag Informal Investment Insights

Beyond International Limited (ASX:BYI)

Beyond International is into TV program production, TV/film distribution (mostly in-house productions), home entertainment (i.e. DVDs)  and digital marketing.

The home entertainment division is shrinking, both in revenue and staff. Digital marketing is only break-even at this point and in a midst of a restructuring that could take some time.

The core of Beyond is making TV programs and distributing them for both local and international markets. Some of the better known productions include MythBusters, Deadly Women and Hot Property. Most of the shows produced are in the "factural" genre with a sprinkling of children programming.

Around 30% of the group's revenue is USD denominated. While some currency hedging are in place, the strengthening of the Australian dollar against USD will generally have a negative impact on revenue and profits.

What's good

  • Balance sheet and cash flows look strong. Low debt, ROE 23%.
  • Management is forecasting EPS to grow by 10-15% in FY13. I personally like when management use and quote EPS as the vital statistic too!
  • It's inexpensive. The trailing P/E is a tad under 10 (EPS 13.80cps). Forward P/E can be as low as 8.25 based on FY13 guidance numbers (EPS 15.18 - 15.87cps).
  • Strong history of earnings growth and profitability improvements over the past 10 years.
  • Founding chairman just recently added a sizable stack of shares (~$2.3m) to his collection. The chairman and managing director hold approximately 40% of the outstanding stock of this $80m market cap company.

What's bad

  • Strong headwinds in the home entertainment division with the decreasing demand for TV and film on physical media.
  • Digital media division. it's still up in the air if they can make a fist of this one.

What's up for consideration

  • The changing landscape for content producers to navigate. On the one hand traditional TV is struggling with reduced advertising dollars. On the other, subscription TV is strong and digital offerings are emerging in a major way.  How Beyond and the rest of the content industry will navigate this I'm not too sure. With players such as HBO and Netflix driving hard for original content, my gut feel at this stage is that things may work out favourably.

BYI last traded at $1.31.

Disclosure: At the time of publishing I own shares in BYI