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Recommendation
New
: BUY
Previous : BUY
Fair Value : Bt31.50
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Boost in
2003 earnings as all units benefit from growth in ad
spending
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We are fine tuning our
earnings forecast for GMM Media (GMMM) and expect to see 23%
net profit growth this year to Bt350mn. The company's
revenues should improve substantially on the back of ad
spending growth and the full-year consolidated income from
eight subsidiaries. Growth in radio revenues will also come
from lower discounts on ad rates of its Green Wave radio
station. Meanwhile, we expect to see significant growth in
TV revenue from increasing number of time slots and
programme adjustments. However, we haven't factored in
additional revenues from ten new magazines expected to
launch this year.
Based on a target 2003 PER of
18x, we come up with fair value estimate on GMMM of Bt31.50
per share. Since the stock is currently trading on 14.6x
multiple, GMMM offers an upside potential of 24%. We are,
therefore, maintaining our BUY rating.
GMMM earnings summary
|
As of |
Net
Profit |
Growth |
EPS |
PER |
EV/EBITDA |
P/BV |
ROE |
|
Dec. |
(Bt mn) |
% |
(Bt) |
(x) |
(x) |
(x) |
% |
|
2001 * |
158 |
2% |
6.06 |
4.21 |
1.67 |
2.01 |
53% |
|
2002 |
285 |
81% |
4.34 |
5.87 |
0.62 |
1.01 |
29% |
|
2003F |
350 |
23% |
1.75 |
14.58 |
7.96 |
2.66 |
20% |
|
2004F |
405 |
16% |
2.03 |
12.59 |
6.87 |
2.30 |
20% |
|
2005F |
439 |
8% |
2.20 |
11.61 |
6.18 |
2.01 |
45% |
Note : * Unconsolidated
Source : Kim Eng Research
- GMMM currently operates five
radio stations, FM.88.0, FM.91.5, FM.93.5, FM.94.0 and
FM.106.5. All are ranked in the top-ten most popular
stations in Thailand. FM.94.0 Bangkok Radio (formally
FM.89.0) was launched in June 2001 has done well so far
and contributed about 10% of radio income. Revenue growth
should also come from lower discount ad rates of FM.106.5
Green Wave, GMMM's flagship station. Total industry radio
ad spending grew 18% yoy in January and should maintain a
strong growth rate this year due to a pick-up in consumer
spending, lower interest rate and higher competition in
various consumer product groups, including energy drinks
and facial-skin care products.
GMMM's radio
stations
|
Broadcasting
station |
Ad
rate |
Broadcast
time |
Revenues |
|
|
(Bt/30
Sec) |
(Hour/day) |
(%) |
|
FM.88.0 - No Problem |
2,100 |
21 |
14% |
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FM.91.5 - Hot Wave |
2,100 |
24 |
15% |
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FM.93.5 - Radio Vote
Satellite |
2,400 and
2,900 |
21 |
20% |
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FM.94.0 - Bangkok Radio |
2,600 |
24 |
10% |
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FM.106.5 - Green Wave |
2,600 |
24 |
41% |
Source : GMMM and Kim Eng
Research
TV business should also show
strong improvement this year after several new programmes
were added in late 2002 and several more new programmes are
scheduled to be launched in the first half of this year.
Compared with 2002, GMMM's air-time slots increased 15% or
178 minutes to 1,338 minutes. The company has also adjusted
some programmes and cancelled non-profitable ones.
GMMM's TV
air-time and ad rate
|
TV
station |
Ad
rate |
Broadcast
time |
|
|
(Bt/Min) |
(Min/week) |
|
Channel 3 |
150,000-220,000 |
90 |
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Channel 5 |
70,000-250,000 |
595 |
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Channel 7 |
75,000-250,000 |
360 |
|
Channel 9 |
70,000-180,000 |
240 |
|
ITV |
60,000 |
53 |
Source : GMMM and Kim Eng
Research
Like its radio and TV
business, GMMM's publishing unit should benefit from rising
ad spending this year. GMMM currently has one magazine –
Image – but plans to launch up to 10 new magazines this
year.
Total revenues are projected
to rise significantly after GMMM consolidates its eight
subsidiaries for the full year. Last year, income from six
subsidiaries started in August and two in November. However,
the company's gross margins are likely to narrow from 68% to
55% due mainly to the contributions from lower margin
businesses, particularly TV and publishing.
GMMM Income statement
|
Income statement (Bt
mn) |
2001 * |
2002 |
2003F |
2004F |
2005F |
|
Sales |
495 |
992 |
1,802 |
2,062 |
2,270 |
|
Other income |
20 |
23 |
33 |
41 |
52 |
|
Total revenues |
515 |
1,016 |
1,835 |
2,103 |
2,322 |
|
Cost of goods sold |
75 |
299 |
795 |
884 |
963 |
|
Depreciation and amortization |
10 |
18 |
24 |
39 |
46 |
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SG&A and others expenses |
204 |
305 |
549 |
639 |
727 |
|
EBIT |
226 |
395 |
466 |
541 |
587 |
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Interest expenses |
- |
0 |
- |
1 |
1 |
|
EBT |
226 |
394 |
466 |
540 |
586 |
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Equity acc. + extraordinary gains |
- |
- |
- |
- |
- |
|
Net profit |
158 |
285 |
350 |
405 |
439 |
Note : * Unconsolidated
Source : Kim Eng Research
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Analyst: Suttatip Peerasub (Ext.
1430)
Email:
suttatip.p@kimeng.co.th
If you have
any questions or suggestions please feel free to email our Research
Webmaster
Copyright © March 2000,
Kim Eng Securities (Thailand) PLC. All rights reserved.
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