ITV announced a 4Q02 loss of
Bt235mn, which was worse than expectations. The loss was
slightly higher than that of 3Q02 and 4Q01 due partly to
narrowing margins and an increase in concession fees from
Bt175mn to Bt200mn.
Sale's growth was achieved
through the improvement in the TV channel's rating after ITV
adjusted its programmes to serve a larger segment of
viewers. Ad income in 2002 grew by 74% to Bt1,146mn, boosted
by special events marketing, such as The World Cup
broadcasting, Miss Thailand Contest and Bangkok Countdown
Festival.
We see a big improvement in
gross margin from 4.3% to 32.5% due mainly to ITV's higher
rating. According to a survey of AC Nielsen (Thailand),
ITV's viewership share rose from 9% to 11%, ranked third
behind channels 3 and 7. However, concession fees increased
by Bt100mn to Bt750mn, under terms of the concession
contract. EBIT excluding the concession fee turned from a
loss of Bt256mn in 2001 to Bt51mn profit.
ITV's financial position has
improved significantly with an increase in its liquidity
ratio from 0.26x in 2001 to 1.24x at the end of 2002. Net
debt-to-equity ratio declined from 1.67x to only 0.28x based
on debt repayment after the capital increase last year.
Our view on ITV remains
positive on the back of the company's improving performance
and growth prospects driven by ad industry growth. New
rating system which is estimated to be in place since the
beginning of next year is likely to benefit ITV as the
station seems to be under-rated by current rating agency.
However, concession fees are the biggest burden to the
company's bottom line. We forecast ITV's net loss will drop
to Bt688mn this year even with a Bt100mn higher concession
fee. We're maintaining our BUY ON WEAKNESS rating on
the stock.
