PBL

Publishing & Broadcasting have made the decision to split the entity into Gaming and Media, which will unlock the inherent value within the Gaming assets, and should also, pending improved disclosure, allow a better appreciation of growth potential in new Media investments. Net $2bn cash from the recent sale of PBL Media will remain with Crown, giving it the flexibility to rapidly pursue additional Gaming investments. Sum-Of-The-Parts Low-Balls The Value; sharemarket analyst's Citigroup Investment Research's current PBL SOP is $21.40, comprised of Crown $13.82, Consolidated Media Holdings at $3.99, Hoyts and New Regency at $0.53, and Cash at $3.06. CIR added recent Gaming transactions at 10% discount to cost. PBL's stake in MPEL is carried at 25% discount to ADR's, making PBL the cheapest entry to Macau Gaming in the analyst's coverage universe. Despite today's rally, PBL still trades at a discount to global Gaming peers. Further International Gaming Acquisitions Most Likely; A bid for Tabcorp at current levels is inhibited by the premium TAH trades at relative to PBL, and the "poison pill" of the Victorian Gaming and Wagering License. The analyst also rules out a bid for Sky City; the assets are not sufficiently material, attractive or cheap. International markets look most prospective. CMH Will Need Funds To Grow; CMH will be left debt and cash-free, but further acquisitions, either in PBL Media or within CMH, will likely require some additional equity to be raised. Split Should Assist Visibility: Investment community has appeared reluctant to ascribe value to Publishing & Broadcasting's commitment to further develop its Gaming interests. The split will improve ability to assess growth potential within each entity.

Publishing & Broadcasting Limited (PBL) has a Neutral 1 broker call and a share price target of $22.60 from sharemarket analyst UBS. PBL has announced an agreement to acquire 19.6% of Fontainebleau a Las Vegas casino developer for $250 million. Fontainebleau Resorts is developing a US$2.8b casino and hotel complex on the Las Vegas strip that is expected to open in late 2009 and is undertaking a US$500m renovation of its Miami Beach Fontainebleau Resort, set to re-open in 2008. The deal is expected to close in May 2007. PBL will be a cornerstone investor not the asset manager in this deal. Management of the casino and other assets will remain with the existing team, the casinos will not be rebranded. Crown and PBL will have the input commensurate with its position as a ~20% shareholder. Given PBL's extensive quality casino expertise, we had expected that any involvement in Las Vegas would have been structured more as a management agreement. Deal is (marginally) earnings dilutive according to the analyst. The investment will reduce interest revenue by ~A$16m pa while we do not expect PBL to receive dividends prior to FY11. the analyst estimates that FY08 EPS will reduce by ~1.4%. From a broader perspective, the issue with this type of investment for Publishing & Broadcasting Limited, particularly those that are not managed/controlled, is that it may become increasingly regarded as a holding company for assets. The analyst's target price is derived as our '08 based sum of the parts.

Publishing & Broadcasting Limited (PBL) have a Neutral 1 share trading recommendation and a lower price target of $22.60 per share (previously $23) from analyst UBS. PBL to invest in Canadian casinos: New World Gaming [50% PBL/Macquarie] has bid for all of Canada's Gateway Casino Income Fund (at a total cost of A$1.446bn) as well as unlisted Star of Fortune Gaming Management and Gateway Casinos Inc. Together, the groups operate 7 casinos in British Columbia and 2 in Alberta. The anlayst estimates an acquisition EV/EBITDA of ~13x consensus '07, albeit most of the facilities are currently undergoing significant refurbishment/expansion. The proposal is via New World Gaming, a 50% joint venture with Macquarie. They expect this could become the vehicle for future investments in the North American market, with Las Vegas one area we believe holds significant appeal to PBL. The anlyst have not yet incorporated the Canadian casinos into our PBL forecasts. However, we are now incorporating our UBS HK Melco-PBL forecasts into our PBL model [previously UBS Aust forecasts] and similarly incorporate the current Melco-PBL share price into our target price [previously the average of the UBS Aust valuation and IPO price].Their target price is derived as our '08 based sum of the parts. With the recent bounce in the PBL share price, our rating remains Neutral 1.

Meanwhile, market analyst Citigroup Investment Research have observed the same deal with Publishing & Broadcasting (PBL): Canadian casinos to be acquired offer a high-margin, low-risk option on further expansion and favourable regulatory outlook in the Western Canadian Gaming Market. Annualised acquisition multiple for the listed CGI of circa 13 times EBITDA - but with likely material growth from further expansion of 4 of its 7 properties over the next 2 years. Star of Fortune also offers a significant development of a new casino in BC, which is almost complete, adding to future earnings outlook. PBL's casino operational experience, and relatively small equity investment indicate that the deal could easily have been undertaken by PBL itself. Citigroup Investment Research suspect that similar to the recent Tattersalls / MBL JV in the UK, MBL promises a pipeline of further acquisitions in North America, which PBL is potentially unlikely to exploit as rapidly alone as it can with a partner who shares in the profitability. The BC Provincial Government is driving the consolidation of the casino market into fewer larger properties, and re-finances the majority of the capital investment in property development, creating a very favourable climate for further investment. The analyst have not reflected any earnings impact of the proposed transaction at this stage. Assuming agreement by CGI unit and debenture holders, and regulatory approvals, the transactions are expected to close late in 2QCY07 or early 3QCY07.

Uncertainty surrounding the opening date of Publishing & Broadcasting (PBL)'s Crown Macau casino has been observed by the Macquarie Research Equities (MRE) analysts. The analyst s are now confident that the opening date pegged for next month is unlikely. However, late second quarter (calendar 2007) remains a possibility. With PBL shares down 15% since December, the question arises – are the shares representing good value at these levels, and what impact will the delays to the opening date have on PBL's bottom line? With regard to the timing of the Crown Macau opening, the Melco/PBL SEC filing for the US IPO indicated the following: "Crown Macau Hotel Casino targeted to open in the second quarter of 2007 and the City of Dreams integrated casino complex, phase one is targeted to open in late 2008".

It is worth noting that this timeline took into consideration recent changes and improvements in the design of the Crown Macau project. The construction contract (for Crown Macau), with Paul Y Construction, listed the revised date of practical completion to be on or before April 2007. The practical completion date remains subject to permitted extensions (including further contract variations etc) otherwise Melco/PBL is entitled to liquidated damages (circa US$45k per day). Separately, monthly gaming statistics (January 2007) released by the Macau Gaming Inspection and Coordination Bureau confirm strong growth in gaming spend, with gaming receipts up an impressive 71.4% vs pcp. Likewise visitation for the month was up 22.7% vs pcp. The strength of visitation to Macau in January (up 22.7%) confirms a very solid start to the year considering “Golden Week” (which commenced 19 February 2007) saw visitation up 17.8% on pcp. Visitors (in January 2007) from Mainland China represented 56.6% of total visitors, up from 55.8% in the previous January. Hong Kong visitors increased by 14.2% on pcp and represent 29.6% of total visitors to the region. Growth in gaming receipts is the more impressive statistic, up 71.4% on pcp, the highest monthly growth rate recorded in the last 12 months.

Ultimately, the analyst expects that the practical completion date will not be met by several weeks, but to-date MRE have no basis on which to assess who will ultimately bear the responsibility of this. Regardless, they consider delays of this magnitude for Crown Macau to be inconsequential, particularly in light of the strength of the gaming spend in Macau noted above.

Publishing & Broadcasting (PBL) have a Neutral 1 share trading recommendation and a price target of $23 per share from analyst UBS. PBL Media has agreed to acquire Nine Perth from Sunraysia for $136.4m, subject to STV shareholder approval. With Eva Presser and WIN accounting for about 92% of the register, the analyst expect this approval should be a formality. Given the PBL Media structure, they expect PBL will be required to inject $15-20m in equity into the JV. For the past 4 halves, TV ad revenue in Perth has grown more slowly than the market overall. From a Nine Network perspective, Perth's All People ratings share in 2006 was 31.3% cf 38% average of Sydney/Melb/Brisbane. Revenue share in the December half is estimated at 30.2% cf 34.4% for Nine east coast while the group reported an operating loss in FY 06 with a further loss expected in H1 07. They expect PBL will be focussing on all three markets. Driven by its east coast processes and approach and the resultant more national proposition. Incremental growth in share [UBSe to 32% by FY10] and margins [to 15%] will bring the acquisition multiple down to <10x. The analysts' FY 08 forecasts have been cut by 0.2%. No change to our valuation or sum of the parts derived target price of $23 which incorporates $5.36 for Macau.

Publishing and Broadcasting (PBL) have an Outperform shares recommendation from stock analyst Macquarie Research Equities (MRE). US investors enthusiastically embraced the future of gambling overnight, sending the shares of newly listed Melco PBL Entertainment on the American Nasdaq soaring almost 14%. The company's listing made Melco the third richest US IPO of the year. Melco PBL Entertainment, a joint venture between Australia's PBL and Hong Kong-based Melco International Development, had initially targeted an IPO price range of $16-$18 per share, however high demand saw the IPO priced beyond this range, at $19 per share. The company also increased its offering to 60.3 million American depositary shares from the initial 53 million shares. The shares hit a high of +18%; the shares closed the session at an impressive US$21.61, up 13.74%, on heavy turnover of more than 48 million shares. The company (MPEL) is expected to become a major casino operator in Macau, the only place in China that allows casino gambling, when it opens its City of Dreams mega-resort in mid-2008. The company plans to open its first casino-hotel, the Crown Macau, in April 2007. It currently operates a chain of slot-machine parlours in the booming Chinese territory, with approx. 30% market share. Some market analysts claim that Macau, the former Portuguese colony that is now a Chinese territory, has the potential to compete with and take over from Las Vegas as the world’s primary gambling city.

Publishing & Broadcasting (PBL) have a Neutral 1 stock recommendation and a share price target of $23 from stock analyst and investment bank UBS. They have noted the restructuring announced last month has significantly reduced PBL's

UBS has rated the Publishing & Broadcasting (PBL) stock with a Buy 1 recommendation and an unchanged share price target of $20.60. The share price target is based on DCF: "sum of the parts and P/E, on an '08E basis and incorporates an implied A$2.58b [US$1.94b] for the Macau joint venture." Increased PBL online investment: "PBL has spent $35.3m increasing its stake in Seek by 2.4% to 27.1%.

ABN Amro have rated the Publishing & Broadcasting (PBL) stock with a Buy recommendation with a short term share price target range of $17.50 to $17.70. The broker retains their long term rating while noting potential short term upside, estimating that the Macau operations are a free option at current prices.