Thursday, April 16, 2009

SCANNING SCANGROUP



Scan group just annouced its full year results for year ending 2008 with Profit after tax up 24%. I got to speak with the man himself Bharat Thakrar (now second biggest shareholder (20%) after getting into bed with WPP Group (27% in october).

The interview airs on CNBC Africa tomorrow.

it's important to first note that the advertising Industry in Kenya grew by 21% in 2008.

with the Company's current market share in East Africa at 46% the growth in the overal industry reflected well in their bottom line.

WPP Group is definately a great lay for Scangroup.The two smart Joint ventures into discplines that Scangroup has not been doing exeptionaly well in, especially PR, which contributed only 3% to the entire outfit. But This is set to change through their latest joint Venture with Hill and Knowlton, which is among the worlds top PR companies, and also part of the WPP group.Ownership, 51 percent Scangroup and 49 percent by a WPP subsidiary.

Exit Scanad PR, Enter Hill& Knowlton East Africa.

Earlier Scangroup entered another venture with Millward Brown, also a leading WPP owned market research company, now called Millward Brown East Africa Ltd.
That's another Step into new ground.Market research has so far contributed only 3% to the scangroup table.

Bharat @ Co realise that Diversification is the name of the game, and know that in a client driven industry you can easily flex muscle using global names.

It was interesting to note that Tanzania had a 62% growth in the advertising industry owing to cash pumped in by Zain. The sector that spent most cash on advertising across East Africa is The Cellular category. Thakrar is a happy man for buying out Redsky Advertising (read Safaricom).

On acquisitiosn in Ghana and Mozambique, that's on hold bearing the global conditions,it may be a better bargain with time. me thinks that's a Good & expected move.

Revenue growth up 24%, Overheads were up 26%. Dividends 75cents per share.(less for WPP group 26 cents as they came in later in the year)

Focus for 2009> keep growing, using the WPP group strategic alliance to grow farther.

Compounded Annual Growth Rate from 2002 up until now, 34 %. They think the trend will continue.

The graph sure sure looks good!

Challenges: the global advertising scene may depress by about 9% this year, this likely to also affect East Africa as companies here begin to slash marketing budgets.

Share price is around 22 bob, I am told it may go lower in reflection to predictions for commercial counters.

Reflecting on fundamentals and growth of the advertising sector as Fiber cable lands,
I think it's a good buy.

3 comments:

  1. Thanks for the details. I've linked my post to this one (for lack of details on my side)

    at what time is your interview with Bharat Thakrar airing on CNBC Africa?

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  2. nice company; intangible media is not well understood, but their strategy to link to leading mobile companies in different african countries could yet lead to a bigger payoff, as will the link to WPP (a Helios like deal)

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  3. Interesting but I still think 20/- is a little pricey. Seems a company with focus.

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