The downgrade by Domain Holdings (DHG) yesterday on the back of weaker listing volumes created some wider peripheral damage, with REA Group (REA) and Nine (NEC) also feeling the repercussions. In terms of NEC which we own in our Emerging Companies Portfolio, they own 60% of DHG and are directly impacted. DHG made up ~14% of NEC’s earnings in FY22 and simply extrapolating the impact of DHG’s 20% downgrade on 1H23 guidance, it would hurt NEC’s earnings by ~3%. NEC also went on to flag a toughening advertising market although other parts of the business are doing well, and they retained their 1H23 guidance, for EBITDA of around $370m in the 1H.
MM remains bullish and long NEC despite recent weakness
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