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Recommendation
New
: BUY
Previous :
BUY
Fair Value :
Bt268
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Jump in
January ad spending bodes well for BEC's earnings prospects
this year
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We are maintaining our
positive view on BEC World (BEC) shares based on the
company's strong fundamentals and financial position. The
company's earnings growth this year will be driven by growth
in industry ad spending, an ad rate hike in 4Q02, as well as
full utilisation of its super prime and prime-time slots. As
one of the TV market leaders, Channel 3 stands to capture a
large portion of the increase in ad spending. Furthermore,
BEC's associated companies, BEC-Tero and CVD, are turning
around and should contribute more to BEC's bottom line. We
expect BEC to post net profit growth of 14% in 2003 to
Bt1,897mn.
We are also maintaining our BUY
recommendation on the stock with a fair value estimate of
Bt268 per share.
BEC earnings
summary
|
As of |
Net
Profit |
Growth |
EPS |
PER |
EV/EBITDA |
P/BV |
P/SALES |
|
Dec. |
(Bt
mn) |
% |
(Bt) |
(x) |
(x) |
(x) |
(x) |
|
2000 |
1,545 |
40% |
7.73 |
26.40 |
9.96 |
5.54 |
8.10 |
|
2001 |
1,543 |
(0%) |
7.71 |
26.45 |
9.61 |
5.51 |
7.77 |
|
2002 |
1,669 |
8% |
8.34 |
24.45 |
9.46 |
5.46 |
7.68 |
|
2003F |
1,897 |
14% |
9.48 |
21.51 |
8.70 |
5.32 |
7.17 |
|
2004F |
2,004 |
6% |
10.02 |
20.36 |
8.30 |
5.24 |
6.88 |
|
2005F |
2,102 |
5% |
10.51 |
19.41 |
8.18 |
5.18 |
6.65 |
Source : Kim Eng Research
- BEC's revenues will continue
to improve following Channel 3's 8-33% ad rate increase in
October 2002. Super prime-time utilisation remains strong
even after the ad rate hike and the launch of a new Taiwan
series. Channel 3 surprised the market by broadcasting a
Taiwanese series, Meteor Garden, during its super, super
prime slot instead of the usual Thai soap opera.
Utilisation of prime-time (especially drama before evening
news) in January also improved from 4Q02.
- Total industry ad
expenditure in January rose by 22%. The bulk of the new ad
spending was in TV commercials, which increased 19% from
the previous year to Bt2,995mn. Mobile phone advertising
was down 33%, but this was more than made up with a 224%
increase in energy drink advertising and 66% increase in
residential housing advertising. It is also interesting to
note that consumer product giant, Unilever, boosted its ad
spending in January by 144% to Bt246mn.
Ad spending
(Bt mn)
|
Type of media |
Jan-03 |
Jan-02 |
Growth (%) |
|
TV |
2,995 |
2,517 |
19% |
|
Radio |
482 |
408 |
18% |
|
Newspaper |
834 |
722 |
16% |
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Magazines |
271 |
227 |
19% |
|
Cinemas |
69 |
31 |
123% |
|
Outdoors |
239 |
124 |
93% |
|
Transit |
42 |
29 |
44% |
|
TOTAL |
4,932 |
4,058 |
22% |
Source : AC Nielsen
(Thailand)
Top 10
spenders by category
|
Category (Bt mn) |
Jan-03 |
Jan-02 |
Growth (%) |
|
Mobile phones systems |
138 |
206 |
-33% |
|
Energy drinks |
137 |
42 |
224% |
|
Residential projects |
126 |
76 |
66% |
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Facial-skin care products |
119 |
95 |
26% |
|
Beer and stout |
117 |
106 |
10% |
|
Direct sales |
114 |
74 |
54% |
|
Government department |
113 |
106 |
7% |
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Trade fairs (Exhibition & shows) |
101 |
62 |
63% |
|
Movie |
99 |
58 |
71% |
|
Communications corporate |
70 |
46 |
52% |
Source : AC Nielsen
(Thailand)
BEC will benefit from the
improved performance of its associated companies, BEC-Tero
and CVD. BEC-Tero started to generate a profit last year,
meanwhile, CVD is expected to turnaround this year after
completing its business restructuring. BEC-Tero's activities
this year include Disney on Ice – Jungle Adventure, Tennis
ATP tournament and 3-4 movies.
BEC Income
statement
|
Income
statement (Bt mn) |
2000 |
2001 |
2002 |
2003F |
2004F |
2005F |
|
Sales |
5,039 |
5,249 |
5,310 |
5,694 |
5,930 |
6,132 |
|
Other income |
210 |
167 |
171 |
179 |
195 |
185 |
|
Total
revenues |
5,249 |
5,416 |
5,481 |
5,874 |
6,125 |
6,317 |
|
Cost of goods sold |
816 |
956 |
947 |
940 |
977 |
1,007 |
|
Depreciation and
amortization |
1,477 |
1,468 |
1,457 |
1,475 |
1,500 |
1,504 |
|
SG&A and others
expenses |
748 |
710 |
711 |
723 |
750 |
773 |
|
EBIT |
2,207 |
2,282 |
2,367 |
2,735 |
2,899 |
3,034 |
|
Interest expenses |
0.42 |
1.02 |
2.32 |
1.55 |
0.96 |
1.59 |
|
EBT |
2,206 |
2,281 |
2,365 |
2,734 |
2,898 |
3,032 |
|
Earnings
before extra items |
1,545 |
1,543 |
1,614 |
1,897 |
2,004 |
2,102 |
|
Equity acc. +
extraordinary gains |
- |
- |
55.00 |
- |
- |
- |
|
Net
profit |
1,545 |
1,543 |
1,669 |
1,897 |
2,004 |
2,102 |
Source : Kim Eng Research
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