Traffic Corner Holdings
(TRAF) reported disappointing 4Q02 results by posting a loss
of Bt23mn compared with profit of Bt21mn in the previous
quarter. Excluding provisions for doubtful debt of Bt12mn,
the company would still have made a loss at the operating
level of Bt11mn. For the full-year, TRAF recorded a profit
of Bt30mn.
The significant drop in the
company's performance was due to margins narrowing to only
15.3% following a sharp increase in costs and expenses.
Meanwhile, sales fell by 3% qoq. TRAF claims that a jump in
costs resulted from over-estimation of broadcasting fees
paid to MCOT and relocation costs of C-Square concert which
was moved several times.
TV production & ad income
and radio income dropped by 37% and 38%, respectively, even
with the strong growth in total industry ad spending and the
typical peak fourth quarter. However, event-marketing income
grew 72% due partly to beer festival income.
TRAF announced to pay
dividend of Bt0.14/share, representing a dividend yield of
3.4% at the current share price. The company's financial
position remains strong with net cash of Bt95mn. or
Bt0.47/share.
Given the disappointing
results and uncertainty of the company's future earnings
prospects, we will likely need to revise down our earnings
forecast after the analyst meeting with management. However,
we're downgrading our recommendation on the stock now to a HOLD.
