turning around::big growth The current management is doing an...

turning around::big growth The current management is doing an excellect job of turning around this company, they have positioned it well in one of the largest growing sectors, new media and online advertising.


SMH: August 3, 2006

"ONLINE advertising will continue its romp until at least 2010. By then it is expected to be the third biggest generator of advertising revenue in the Australian media sector - behind TV and newspapers - with $1.78 billion.

The bullish internet growth, forecast by PricewaterhouseCoopers this week, will come at the expense of free-to-air TV, radio and newspapers. Collectively they will have 8.8 percentage points shaved from their market shares over the next five years in what will be a $13.5 billion media advertising sector returning an overall annual growth rate of 6 per cent, according to PWC."

http://www.smh.com.au/news/technology/online-will-just-keep-getting-bigger/2006/08/02/1154198205233.html

With Hyro's recent aquisition of Fluoro the can now offer not only an extended creative approach for their clients through everything from E-Commerce, online gaming (In ten years time this will be a major player in entertainment knocking on the door of Cinema), database development, viral marketing and email campaigns, but they can also include Stratergy (very important in advertising), web services, wireless (mobile phone) and broadcast (interactive Tv).

http://www.fluoro.com.au/

Looking at the numbers side, they have had an excellent year, revenue is projected to have doubled from last year to $22,300,000 with projected revenue growth for 2007 and 2008 to be around 50% (but with the sector hotting up I would have thought it to be closer to 60% for both years), they also recorded an operating profit for the second quater ahead of shedule. Top five clients demand has been increasing at a rate of 10%-12% quarter on quarter. Thailand has had an increase in billings of 124% this year and has remained profitable since the start of the year, they currently represent 10% of Hyros revenue.

Looking forward they are looking to grow Thailand with a possible local float and the possible soft, low overhead, entrance into the North American market by bid support for Hyro Government IP.

Looking at its major peers that we all know, PGA is probably where HYO want to be, and I expect will buy by the end of 2007. EMI is probably the closets comparision for HYO, EMI would be around nine months ahead of HYO on a growth basis. With EMI valued at $161Mill with 180Mill on issue, HYO valued at $30Mill with 280Mill on issue, I would say HYO was heavily undervalued and would expect to see the share price around 40c in twelve months, easy.

With HYO starting moving into a strong growth phase, in a sector that has strong growth, that should last for the next ten years, HYO would be an ideal T/O target for any advertising agency that needs to grow out of the current traditional advetising mediums (most agencies, even the big ones, have been slow to captialise on the current growth in new media).

One, more thing, HYO used to be owned by Fairfax when it went by the name Brainwave.