Scholarship

JCDecaux: Deutsche Financial institution lowers goal value – 16.09.2022. at 10:35

(AOF) – Deutsche Bank remains hold on JCDecaux as it cut its price target from €22 to €18 as part of a sector study. The research department is more cautious about the macroeconomic headwinds ahead.

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Key points

– World leader in outdoor advertising created in 1964;

– The group of inventors of the street furniture concept (52.4% of sales), present in transport advertising (32%) and large-format billboards (15.6%);

– Worldwide presence, with revenues of 2.74 billion euros, divided between continental Europe for 49%, Asia and the Pacific for 25% (including China, 1

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Group market), United Kingdom by 9% and North America by 6%;

– Business model broken down into 3 advertising activities with street furniture (52.5%), land and airport transport networks (30%) and large format billboards as support, with diversification into bike sharing (No. 1 in the world);

– 64.67% equity participation by the founding family’s holding company, with a supervisory board of 12 members, and the board of directors co-chaired by Jean-François and Jean-Charles Decaux;

– Solid financial position with net debt of 977 million euros at the end of June against 1.6 billion euros of capital.

Challenges

– Triple strategy: internal growth through signing contracts, strategic acquisitions and combined use of digital, data and software;

– Innovation strategy integrated into the business model (portfolio of 1410 patents), open and focused on: a unique and protected solution for managing and distributing digital campaigns / use of innovative technologies for platform development – Data Solutions, OOH Planner, OOH Measurement, VIOOH / secure infrastructures cloud-based; ;

– Proactive environmental strategy, activities in France are carbon neutral from 2021: electricity consumption 100% from renewable energy sources, eco-design and circular economy, LED electricity consumption and intelligent lighting by modulating according to the presence of people;

– Strategic and capitalist alliance, with Displayce (Demand Side Platform) leader in complete and combined programming solutions with DOOH inventory;

– Long-term contracts (on average 15 years) ensuring constant income, independence from advertisers, top 10 representing less than 13% of traffic and presence in 12 of the 15 cities that contribute the most to global GDP estimated by 2030;

– Acceleration of digital growth (more than 1/3 of revenue) driven by the introduction of the VIOHH programmatic sales platform, connected to 36 DSP platforms.

Challenges

– Resistance to continuous closures in large Chinese cities and global economic decline due to the Russian-Ukrainian war;

– After the return of street furniture activity to pre-Covid levels, the expectation of a full recovery of the transport sector, still affected by the lockdown in China.

Online advertising growth has slowed

After a record-breaking 2021, advertisers are now more cautious. In the first quarter, online advertising saw growth limited to 7% for Meta, the weakest level since its IPO in 2012. The former Facebook was particularly hit by Apple’s new system that limits ad targeting. Indeed, iPhone apps now have to ask their users if their data can be shared with third parties for advertising purposes. According to industry experts, the shortfall for Facebook, YouTube, Twitter and Snapchat could approach $16 billion in 2022.

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