The Great Outdoors; Reinstate with Buy

Research evidence excerpt

The Great Outdoors; Reinstate with Buy

ontinue into PREV 0.05 NA NA

FY27E, forecasting revenue growth of 11%. The City of Sydney provides a good reference

contract for future tenders (e.g. Melbourne, Perth) and Retail, which is still under-represented

at QMS. A key competitor OML has $33m of contract revenues expiring in CY26, with a further Figure 2 - NEC EBITDA by Division (FY25-28):

$118m in CY27. Outdoor will represent 36% of group EBITDA in

FY28E

Other segments doing well. In television, we believe that NEC is taking share from Seven West 600500

Media, which is undergoing a period of significant change - a merger with SXL, management 400

and Board changes. In its latest update, NEC reported that Total TV revenues grew by LSD 300

% in Q3, an upgrade from its previous expectations of flat growth. NEC upgraded its FY26 200100

Total TV cost-out expectations to MSD-HSD % (from MSD prev). Some of this may come from 0

a reduction in external advertising ($70m pa, 20% outdoor) by utilising excess inventory at -100 FY25 FY26E FY27E FY28E

QMS. Stan continues to perform well, with strong EBITDA growth expected in 2H. Publishing . Total TV Publishing Stan Outdoor Corporate costs

Source: Company data, Jefferies

subscription revenue grew 15% in Q3 with positive momentum continuing into Q4, though Note: Excludes corporate costs and associates

margins will be impacted by higher fuel costs.

Figure 3 - Australia total OOH Industry

Buy, PT $1.30. NEC is trading on <10x PE in FY27E, below its historical average of 12.8x, while Revenue ($m)

1301.8the business is now more resilient against an ad market downturn with the addition of QMS. 16001400 1204.6 1449.5

831.1 789 837 922

668.9Dividend yield is attractive at 7%. 12001000800 579 682 1066.4 1060.5

Figure 1 - NEC Summary Table 400200