edel AG (DE:EDLG)’s results to September 2017 were comfortably ahead of earlier guidance, revised post year-end. Revenues were boosted by good demand at Optimal Media, particularly for vinyl records, increased music streaming and by a good performance in cookery and health-related books. The capital investment programme is boosting market positioning while the earlier refinancing has reduced the interest burden. The group is majority family-owned with limited market liquidity, which partly explains the modest rating. The shares trade at a discount to global entertainment content and publishing companies, and carry an attractive yield.
Market forecasts revised up post year-end
FY17 revenues of €198.1m were well ahead of previous guidance (€187m). FY18e consensus revenue forecast has been raised from €194.9m to €203m, while FY19e numbers show 3% further growth. This primarily reflects a strong performance from Optimal Media, where revenues were up 12% in FY17. Sales were buoyed by strong demand for vinyl records (+40%), benefiting from the company’s market reputation for high quality and for being a ‘one-stop-shop’, as well as additional business from Universal, for which Optimal now carries out central storage and worldwide distribution of all vinyl products. Difficult underlying markets for other delivery media (CDs, DVDs) may play in Edel’s favour as less efficient players withdraw from the market, although rising input costs will be less helpful. Kontor New Media also performed well, boosted by market growth in music streaming and its ability to handle distribution end-to-end from rights acquisition right through to the streaming.
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