THAILAND EQUITY RESEARCH
Page | 1 | PHILLIP SECURITIES (THAILAND)
VGI Global Media
3QFY16 net profit seen down y‐y and q‐q in absence of ex‐items THAILAND | SET | MEDIA | COMPANY PREVIEW BLOOMBERG VGI TB l REUTERS VGI.BK 4QCY15 ad spending down 4.7% y‐y but full‐year CY15 figure up 3.3% y‐y and growth rate set to pick up 5% y‐y in CY16 Total ad spending in Thailand dropped 4.7% y‐y to Bt30,699mn in 4QCY15, according to data from The Nielsen (Thailand). Spending on in‐store media fell the most among others at up to 84.7% y‐y after VGI exited from modern trade media business following termination of ad media contracts with Tesco Lotus and Big C. Magazine ad spending was the second worst performer due to rising demand for online ads. Spending on free‐to‐air terrestrial TV ads plunged 10.4% y‐y while digital TV saw ad expenditures rise 20.3% y‐y. Taking only VGI‐related media, outdoor and transit media grew 10.9% and 3.6% y‐y respectively. For the whole of CY15, total ad spending rose 3.3% y‐y to Bt122bn. The president of the Advertising Association of Thailand (AAT) has also expected the pace of ad spending growth in Thailand to quicken further to 5% y‐y in CY16 based on GDP growth of 3%‐4%. In our view, the pace of recovery remains limited while a host of negative factors including severe drought spell, agricultural price collapse, government investment delay and global economic pressure may cause the country’s GDP to fall short of target which could in turn deal a blow to the ad industry. 3QFY16 net profit seen down y‐y and q‐q in absence of ex‐items We forecast VGI to report a net profit drop of 12.6% q‐q and 24.7% y‐y to Bt227mn in 3QFY16 partly reflecting ex‐items in 2QFY16 and 3QFY15. Our forecast assumes quarterly sales and service revenue will come in at Bt547mn, up 1.9% q‐q but down 30.7% y‐y due to the loss of revenue from modern trade media business. As growth in outdoor and transit media stemmed partly from increased media space after VGI received additional rights to manage media space on seven new BTS extension stations and revenue from the above seven new stations still remained weak during the initial stages of operations, we expect revenue from BTS‐related media business, which contributes up to 90% of sales and service revenue will be flat q‐q but down y‐y. In our view, we believe much of the growth in 3QFY16 would come from office building and other media business after VGI added 15 more buildings to its portfolio under media management contracts, taking the total to 118 buildings and it also started realizing revenue from the recently installed LCD and LED screens inside and outside Chamchuri Square building, sales agent contract with Artista Media which installs ad screens at 219 condo buildings and an increased number of Midas Clock Towers. However, concession for three LED digital screens around Victory Monument had been terminated. Stripping out ex‐items in 2QFY16 and 3QFY15, we expect its core profit to be up 1% q‐q but down 12.2% y‐y in 3QFY16. FY16 view unchanged, ‘NEUTRAL’ rating reaffirmed with Bt3.70/share target price Our forecast suggests sales and service revenue will drop in 4QFY16 as 4Q is typically the low season for the ad industry and additional revenue streams from new media businesses and increased media space may not be strong enough to fully offset the loss of revenue from modern trade media business. However, the termination of concession for loss‐making LED digital screens at Victory Monument would allow VGI to see cost savings of around Bt15mn/quarter. On this basis, we estimate 4QFY16 net profit will be significantly higher than 4QFY15 when it earned only Bt15mn hit by a Bt269mn provision for initial damage incurred from the termination of contract with Big C. For the meantime, we leave our FY16 sales and service revenue and net profit forecasts for VGI unchanged at Bt2,242mn and Bt993mn respectively. We may place our forecasts under review and roll forward our valuation to FY17 after the upcoming analyst meeting. Our FY16 target price for VGI also remains at Bt3.70/share. The target is SOTP‐based. With no upside left from current trading levels, we cut our rating on VGI shares to ‘SELL’ from ‘NEUTRAL.’
Ref. No.: CO2015_0023
Closing Price(Bt) 3.64Target Price(Bt) 3.70 (+4.40%)
COMPANY DATA
O/S Shares (mn) : 6,864 Market Cap. (Btmn) :Market Cap. (USDmn) :52‐WK Hi/Lo (Bt) : 6.65/3.443M Average Daily T/O (mn) : 6.93Par Value (Bt) : 0.10
MAJOR SHAREHOLDERS (%)
1. BTS Group 73.82. Thai NVDR Co., Ltd. 2.23. State Street Bank Europe Ltd. 2.1
PRICE PERFORMANCE (%)
1MTH 3MTH 1YRABS 0% 0% ‐39%REL TO SET INDEX 1% 13% ‐25%
PRICE VS SET INDEX
Source: Bloomberg, PSR
KEY FINANCIALS
FYE Mar FY14 FY15 FY16E FY17ESales(Btmn) 3,149 2,963 2,242 2,361Net Profit(Btmn) 1,146 838 993 1,161EPS (Bt) 0.33 0.12 0.14 0.17P/E (X) 11.0 30.3 25.2 21.4BVPS (Bt) 0.57 0.26 0.33 0.37P/B (X) 6.4 14.0 11.0 9.8DPS (Bt) 0.31 0.04 0.10 0.12Dividend Yield (%) 8.5 1.0 2.7 3.3ROE (%) 60.71 44.81 48.69 47.78Source: Company, PSR Est.**Multiples and yields are based on latest closing price
VALUATION METHOD
SOTP
Siam TiyanontSecurities Investment Analyst #17970Tel: 66 2 635 1700 # 483
24,986 688
15 July 2015
Neutral (Upgraded from Sell)
13 January 2016
0246810
Jan‐13 Jan‐14 Jan‐15 Jan‐16
VGI TB EQUITY SETI (rebased)
THAILAND EQUITY RESEARCH
PHILLIP SECURITIESS (THAILAND) | 2 | P a g e
Corporate Governance ‐2015
ADVANC BAFS BCP BIGC BTS CK CPN DRT DTAC DTCEASTW EGCO GRAMMY HANA HMPRO INTUCH IRPC IVL KBANK KCEKKP KTB LHBANK LPN MCOT MINT MONO NKI PHOL PPSPS PSL PTT PTTEP PTTGC QTC RATCH ROBINS SAMART SAMTELSAT SC SCB SCC SE‐ED SIM SNC SPALI THCOM TISCOTKT TMB TOP VGI WACOAL
AAV ACAP AGE AHC AKP AMATA ANAN AOT APCS ARIPASIMAR ASK ASP BANPU BAY BBL BDMS BECL BKI BLABMCL BOL BROOK BWG CENTEL CFRESH CHO CIMBT CM CNTCOL CPF CPI CSL DCC DELTA DEMCO ECF EE ERWGBX GC GFPT GLOBAL GUNKUL HEMRAJ HOTPOT HYDRO ICC ICHIINET IRC KSL KTC LANNA LH LOXLEY LRH MACO MBKMC MEGA MFEC NBC NCH NINE NSI NTV OCC OGCOISHI OTO PAP PDI PE PG PJW PM PPP PRPRANDA PREB PT PTG Q‐CON QH RS S & J SABINA SAMCOSCG SEAFCO SFP SIAM SINGER SIS SITHAI SMK SMPC SMTSNP SPI SSF SSI SSSC SST STA STEC SVI SWCSYMC SYNTEC TASCO TBSP TCAP TF TGCI THAI THANA THANITHIP THRE THREL TICON TIP TIPCO TK TKS TMI TMILLTMT TNDT TNITY TNL TOG TPC TPCORP TRC TRU TRUETSC TSTE TSTH TTA TTCL TTW TU TVD TVO TWFPTWS UAC UT UV VNT WAVE WINNER YUASA ZMICO
2S AEC AEONTS AF AH AIRA AIT AJ AKR AMANAHAMARIN AP APCO AQUA AS ASIA AUCT AYUD BA BEAUTYBEC BFIT BH BIG BJC BJCHI BKD BTNC CBG CGDCHG CHOW CI CITY CKP CNS CPALL CPL CSC CSPCSS CTW DNA EARTH EASON ECL EFORL ESSO FE FIREFOCUS FORTH FPI FSMART FSS FVC GCAP GENCO GL GLANDGLOW GOLD GYT HTC HTECH IEC IFEC IFS IHL IRCPITD JSP JTS JUBILE KASET KBS KCAR KGI KKC KTISKWC KYE L&E LALIN LHK LIT LIVE LST M MAJORMAKRO MATCH MATI MBKET M‐CHAI MFC MILL MJD MK MODERNMOONG MPG MSC MTI MTLS NC NOK NUSA NWR NYTOCEAN PACE PATO PB PCA PCSGH PDG PF PICO PLPLANB PLAT PPM PRG PRIN PSTC PTL PYLON QLT RCIRCL RICHY RML RPC S SALEE SAPPE SAWAD SCCC SCNSCP SEAOIL SIRI SKR SMG SOLAR SORKON SPA SPC SPCGSPPT SPVI SRICHA SSC STANLY STPI SUC SUSCO SUTHA SYNEXTAE TAKUNI TCC TCCC TCJ TEAM TFD TFI TIC TIWTLUXE TMC TMD TOPP TPCH TPIPL TRT TSE TSR UMIUP UPF UPOIC UREKA UWC VIBHA VIH VPO WHA WINXO
Score Range
< 50%
50‐59%
60‐69%
70‐79%
80‐89%
90‐100%
The disclosure of the survey result of the Thai Institute of Directors Association (IOD) regarding corporate governance is made pursuant to the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company l isted on the Stock Exchange of Thailand and the Market for Alternative disclosure to the public and able to be accessed by a general public investor. The results, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information.
The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that data. Phil l ip Securities (Thailand) of securities company does not confirm nor certify the accuracy of such survey result.
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Results Presentation
THAILAND EQUITY RESEARCH
PHILLIP SECURITIESS (THAILAND) | 3 | P a g e
Industry Group Name Sector Name Sector IndexAgro & Food Industry[AGRO] Agribusiness AGRI
Food & Beverage FOODConsumer Products[CONSUMP] Fashion FASHION
Home & Office Products HOMEPersonal Products & Pharmaceuticals PERSON
Financials [FINCIAL] Banking BANKFinance & Securities FINInsurance INSUR
Industrials [INDUS] Automotive AUTOIndustrial Materials & Machinery IMMPackaging PKGPaper & Printing Materials PAPERPetrochemicals & Chemicals PETROSteel STEEL
Property & Construction[PROPCON] Construction Materials CONMATConstruction Services CONS Property Development PROPProperty Fund & REITs PF&REIT
Resources [RESOURC] Energy & Util ities ENERGMining MINE
Services [SERVICE] Commerce COMMMedia & Publishing MEDIAHealth Care Services HELTHTourism & Leisure TOURISMProfessional Services PROFTransportation & Logistics TRANS
Technology [TECH] Electronic Components ETRONInformation & Communication Technology ICT
PSR Rating SystemCapital Gain Recommendation> 15% BUY> 5% ‐ 15% ACCUMULATE / TRADING BUY> 0% ‐ 5% NEUTRAL0 <= SELL
RemarksWe do not base our recommendations entirely on the above quantitative return bands. We consider qualitative factors l ike (but not l imited to) a stock's risk reward profi le, market sentiment, recent rate of share price appreciation, presence or absence of stock price catalysts, and speculative undertones surrounding the stock, before making our final recommendation
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