全球-媒体行业-广告代理：部门的有机增长继续复苏，但PUB和WPP能否与行业保持一致？

www.ubs.com/investmentresearch This report has been prepared by UBS Limited. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 24. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.  Global Research 6 September 2018 Advertising Agencies Sector organic growth continues to recover but can PUB & WPP grow in-line with the sector? Sector growth recovering but European agencies underperform Our original positive stance on Agencies was underpinned by our belief sector organic growth would inflect from 1% in 2017 to 2% in 2018 and beyond. Q218 results and new evidence suggests this is now likely. In Q218, organic growth increased to +1.7%. Company guidance implies a stronger H218 with FY18 guidance equal to +2.1% sector growth. Ad Age data shows demand for creative services in the US (where growth is weakest) is improving with creative jobs +1.6% ytd vs -3% in 2017. The recent CMO survey (Sept-18) also indicates higher CPG ad spend and suggests the threat of moving media spend in-house is overplayed with the expected use of agencies for social media activities at a high. However, what we didn’t expect was significant sector market share shifts with PUB (-2.2% in Q218) and WPP (+0.7%) underperforming sector growth. The key question now is can WPP and PUB under new CEOs claw back share? Can WPP and PUB win back share under new leadership? In Q218, Dentsu grew +5.9%, IPG +5.6% and OMC +2% outperforming WPP +0.7%, PUB -2.1% and Havas -4%. WPP's underperformance arose from continued creative, US and DIM weakness. Since Q117, US and DIM growth has been negative, with US growth deteriorating in Q218 to -3.3%. Under a new CEO, we expect WPP to address US and creative problems via investment in talent while a Kantar sale would remove the DIM drag. However, this may take time and we only expect US recovery in FY20 with WPP underperforming until then. For PUB, underperformance stemmed from GDPR, Health, account losses and tough comps after 4 quarters of outperformance. In H218, we should see PUB return to growth driven by account wins (+200bps), a reduced Health impact and growth from "strategic game changers" (+27% in H118). Remain positive on PUB and WPP but catalysts may be more visible at PUB We view PUB (Buy) now offers the best risk reward with more visible catalysts. We see PUB deliver 2% organic growth in H218 with a 8% FY18-21 EPS CAGR underpinned by cost out. For WPP (Buy), H218 organic growth is expected to remain anaemic (+0.5%) with a 5% 3-yr EPS CAGR driven by buy-backs (2-3%) with margins flat as cost out from simplifying the model is used to invest in talent and technology to drive a revenue recovery. Upside exists if the new CEO can deliver change faster, unlock value