NEC and APX

Hi John,

Two often discussed stocks of late for very different reasons:

Nine Entertainment (NEC) – shot out of the blocks this month following US property giant CoStar’s $2.7 billion bid for Domain (DHG), of which, NEC owns 60% – this is certainly the reason for the bump in share price. With the stock trading ~$1.65 a couple of thoughts:

• If the board rejects the bid for this prized asset the stocks likely to tumble 10-20% very quickly.
• NEC‘s report this week was solid but it is not the reason the share price is where it is.

While NEC have stressed DHG is a strategic asset and really important to the group, which is exactly what a majority shareholder would say, we’ve actually heard they were shopping it around to private equity last year. Ultimately, we think they will sell for the right price, but whatever happens, CoStar are a very credible operator who saw a lot more value in DHG than the market did –  a degree of that will stay even if CoStar walk.

• We remain long and bullish NEC, but the risks are obvious short-term.

Appen (APX) – APX basically halved this week, this is not a classic AI play, it’s all about the company itself. Its AI-training work volumes fell at the start of the fiscal year and while the companies loss was lower than expected, declining volumes doesn’t bode well for future growth.

• We see far better alternatives for AI exposure than APX which comes with huge stocks specific risk.

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Nine Entertainment Co Ltd (NEC)

LAST UPDATED 28/02/2025 12:33

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Nine Entertainment Co Ltd (NEC)

LAST UPDATED 28/02/2025 12:33