GMM Media (GMMM) reported
yesterday a 36% qoq growth in 4Q02 earnings to Bt88mn,
bringing its full-year 2002 earnings to Bt285mn. This was
well below our previous estimates, however, since GMMM only
started to realise contributions from six subsidiaries in
August and another two in November.
GMMM's 4Q02 sales increased
sharply over the previous quarter due to initial
contributions from the subsidiaries as well as the
traditional pick up in fourth quarter ad spending. Total
industry radio and TV ad spending rose by 34% and 25%,
respectively.
GMMM's 4Q02 gross margins
slipped from 73% to 54% as a result of the consolidation of
its TV businesses, which contribute a relatively lower
margin compared with radio. GMMM also benefited from a
reduction in its corporate income tax rate from 30% to 25%
after gaining a listing on the SET.
GMMM has no debt and
generated operating cash flow last year of Bt262mn or
Bt3.98/share. The company will pay a dividend of
Bt0.95/share (3.7% yield) on May 6. The share goes XD on
April 2.
We will revise our earnings
forecast for GMMM after the analyst meeting this afternoon.
However, we still believe the company's future earnings
prospects are promising given 1) full-year consolidation of
its subsidiaries; 2) continuing growth in ad spending; 3)
GMMM's market leading position in radio industry; and, 4)
expectations of lower discounts on radio ad rates. We're
maintaining a BUY recommendation on GMMM.
GMMM 4Q02
results
