2012 Media Releases

Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB) has initiated coverage of Australian media group STW Communications (ASX: SGN) with a Buy recommendation.

Research analyst Tim Plumbe said, “STW Communications meets a number of characteristics that we look for amongst the emerging companies’ cyclical industrial stocks; a strong market position, minimal structural issues, proactive management, a strong balance sheet, a supportive dividend yield and an inexpensive valuation.

“Despite the subdued advertising market, STW Communications has achieved growth through market share – 3.8% organic growth in CY2011 – compared to our estimated 1%-2% growth for the cyclically impacted Australian ad market. In our view this reflects both STW Communications’ increasing exposure to online and the benefit of being able to offer clients a full range of services, creating opportunities to gain market share.”

Deutsche Bank analysts believe that the companies’ ability to operate a full-service model provides the opportunity to cross sell and potentially increase its market share. The company is differentiated from traditional media stocks as a beneficiary of the structural shift to online advertising as 23% of revenues are from exposure to the online market. In addition, with an operating cost base predominantly made up of staff, STW Communications should not experience the same sort of volatility in its earnings as other media companies if management are swift to react to a potential slowing ad market by adjusting headcount accordingly.

Plumbe said “Furthermore, we see potential upside to our 12-24 month forecasts from acquisitions, the company’s expansion in to Asia, traction within the expansion of Australian operations and a cyclical recovery within the Australian ad market.”

STW Communication is Australasia’s largest full-service marketing communications group with over 70 specialist companies providing services across all aspect of media communications, including advertising, digital, communication, production, branded content, retail and promotional marketing, sports sponsorship and management, brand and corporate design, business strategy, market research and insight, public relations, corporate communication, employee communication,
multicultural communication, training and facilitation.

For further information, please contact:

Deutsche Bank AG    
Name : Amy King   
Phone: +61 (0) 2 8258 2505
E-mail: amy.king@db.com