Nation Multimedia Group (NMG)
reported 4Q02 results of Bt32mn, lower than our previous
estimates. Normalised profit, excluding a one-time gain from
sales of fixed asset and bad debt, stood at Bt47mn, up 22%
qoq and 69% yoy. This brought 2002 normalised earnings to
Bt181mn, representing an increase of 69%.
NMG shows an improvement in
sales as well as gross margins on the back of 1)
fully-booked income from its newspaper, Kom Chad Luek; 2)
newspaper ad industry growth of 17% to Bt3,112m; and 3) a
18% decline in newsprint costs.
An increase in selling and
administration cost was due to staff and promotion costs
related to Kom Chad Luek. Interest expenses decreased
slightly following debt refinancing after NATION issued new
debentures with a lower interest rate.
The company's net
debt-to-equity ratio rose from 1.7x to 2.2x at the end of
2002.
We are maintaining our BUY
recommendation and fair value estimate of Bt17.10 on NMG.
This is based on the company’s improved performance and
growth potential from the successful Kom Chad Luek, which is
now ranks third in terms of circulation and number of ad
pages. We believe the company will achieve even better
performance this year due to good prospects in the ad
industry and lower newsprint costs after NMG signed one-year
contract for buying newsprint at low prices last year.
