Buy (17E TP Bt11.00) Company Update
RS
Buy (17E TP Bt11.00)
Company Update
Close Bt9.20
Media & Publishing May 19, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged A very positive outlook for Healthcare and Beauty business Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.169
0.314
KT ZMICO vs. consensus Share data
36.1%
40.1%
Reuters / Bloomberg
RS.BK/RS TB
Paid‐up Shares (m)
1,009.94
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
9.00/269.00
Foreign limit / actual (%)
49.00/3.72
52 week High / Low (Bt)
11.80/5.95
Avg. daily T/O (shares 000) NVDR (%)
3,539.00 4.78
Estimated free float (%)
46.59
Beta
1.30
URL
www.rs.co.th
CGR
Anti‐corruption
n.a.
Anapat Wanuschaiyapruk Analyst, no 57076 [email protected] 66 (0) 2-624‐6289
Earnings revised up from more H&B sales At the analyst meeting, RS expressed a more bullish view on the Healthcare and Beauty business (H&B) but sees a soft outlook for media business. Sales of H&B made a new high in April at Bt95mn, compared to Bt60mn to Bt70mn per month in the first quarter. We think RS is moving in the right direction for H&B business. We revised up our core profit forecast due to a higher H&B sales forecast. Our 17E TP rises to Bt11.00. Maintain Buy. Soft Adex to tone down media growth outlook RS saw very soft media spending in 1Q17. Even though Nielsen reported Adex on digital TV growth of 7%YoY, it was mainly contributed by Workpoint channel. Consequently, CH8 is not likely to increase its ad rate for the remaining three quarters. The management expects CH8’s revenue in 2Q17 and 3Q17 to increase by 15% from 1Q17 (around Bt306mn). Thus, we believe our forecast at Bt1,445mn (assuming a utilization rate at 60%) looks achievable. We expect the gross margin of the TV business, which includes three satellite channels, to recover from ‐6% last year to 18% this year since costs will increase at a slower pace than revenue. H&B sales to hit management target In 1Q17, H&B generated total revenue of Bt199mn, with the highest monthly sales in March at Bt80mn. H&B sales in April already surpassed March’s at Bt95mn and the momentum has continued in May. The management is confident that H&B revenue will hit their target at Bt800mn this year. RS also signed partnership agreements with other product owners to utilize RS’s facility as a sales channel (RS’s TV network and call center team). By doing this, RS will receive the gross margin in return. We lift our sales forecast from Bt420mn to Bt703mn, still quite conservative compared to the actual sales. Note also that we have not factored in the revenue from sales from the partnership agreements. However, we revise down our gross margin assumption from 75% to 70% to reflect the actual results in 1Q17. Buy rating maintained We revise up net profit in 17E, 18E, and 19E by 54%, 16%, and 4%, respectively, mainly from the higher revenue forecast of H&B. Our 17E TP rises to Bt11.00 (from Bt10.70), with 19% upside. Maintain a Buy rating. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt)
2014 4,306 341 0.38 ‐13.6% 0.30 1.70
2015 3,729 122 0.12 ‐68.0% 0.10 1.78
2016 3,125 (102) (0.10) ‐186.3% 0.00 1.09
2017E 3,131 223 0.23 ‐320.7% 0.00 1.32
2018E 3,575 428 0.44 92.5% 0.18 1.76
2019E 3,778 539 0.56 25.8% 0.22 2.14
FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 24.54 5.95 5.45 3.2% 21.7% ‐21%
2015 76.57 14.18 5.21 1.1% 7.2% ‐43%
2016 ‐88.69 32.39 8.52 0.0% ‐7.4% 102%
2017E 40.18 11.63 7.03 0.0% 19.2% 82%
2018E 20.87 8.46 5.26 1.9% 28.8% 45%
2019E 16.59 7.55 4.32 2.4% 28.6% 24%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 2: CH8’s ad rate and utilization rate
Ad rate
Source: RS, KT Zmico Research
Figure 3: TV revenue
Figure 4: Radio revenue
49 50
CH8
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
0
Sat/cab channels
Source: RS, KT Zmico Research
Source: RS, KT Zmico Research
Figure 5: H&B revenue and gross margin
Figure 6: Media revenue breakdown
(Bt'mn) 250
76%
77% 199
74%
73%
150
70% 69% 91
100
70 29
0.78
3,000
0.76
2,500
0.74
2,000
0.72
1,500
0.7
84 53
40
53
0.68
50
0.66 0.64
0
1,000 500
H&B
1,908 440 702
2,052
1,809
455
401
659
766
938
1,049
2014
2015
2016
Gross margin
Ch8
Source: RS, KT Zmico Research
Figure 7: Media and TV gross margin
Figure 8: H&B revenue
47% 37%
36%
32%
30%
26%
30% 9%
10% 0%
30%
18%
17%
20%
26%
35%
12%
‐6%
-10% 2013
2014
2015
2016
Media (TV+radio)
Source: RS, KT Zmico Research
2017E TV
2018E
2019E
20% 10% 0%
1Q17
4Q16
3Q16
1Q16
2Q16
2,354
2,089
326 294
319 324
359
Source: RS, KT Zmico Research
40%
30%
2,540 332 300
1,734
1,908
2018E
2019E
1,445
0
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
50%
40%
(Bt'mn) 77%
200
50
4Q16
95 103 89
3Q16
112
2Q16
50
130 113 96 89 58 54 53 40
50%
Utilization rate
1Q16
100
1Q15
150
4Q14
175
200
3Q14
250
60%
(Bt'mn) 200 173 180 160 160 141 140 129 140 119 117 111 108 120 103 101 100 82 75 80 60 40 20 0 2Q14
282 287 276 232 226 200 190 176 162
300
306
1Q14
(Bt'mn) 350
4Q15
Apr17
RS
4Q15
One
Feb17
Oct16
Dec16
Aug16
Jun16
Apr16
MONO
Source: AGB Nielsen, KT Zmico Research
2Q15
WORK
Feb16
Dec15
Oct15
Aug15
Jun15
Apr15
Feb15
Dec14
0.0
3Q15
0.2
3Q15
0.4
2Q15
0.6
1Q15
0.8
4Q14
1.0
3Q14
55% 40,000 52% 52% 50% 50% 50% 46% 35,000 45% 42% 41% 30,000 37% 32% 25,000 25% 20,000 15,000 10,000 5,000 0 2Q14
(Bt/min)
1.2
1Q14
1.4
1Q17
Figure 1: CH8’s rating
(Bt'mn) 1,000 900 800 700 600 500 400 300 200 100 0
2017E
Satellite TV
Radio
881
898
916
2018E
2019E
2020E
703
232
228
2015
2016
2017E
Source: RS, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
FINANCIAL TABLE PROFIT & LOSS (Btmn) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Extra Items Non‐controlling Net profit Reported EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories Investment PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity CASH FLOW (Btmn) Net income Non‐cash adjustment Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 4,306 (2,941) 1,365 (792) 1,652 (1,078) 574 (78) 23 519 (107) (44) (27) 341 0.38 385 0.43 0.30
2015 3,729 (2,707) 1,022 (875) 694 (547) 147 (81) 51 118 12 2 (10) 122 0.12 120 0.12 0.10
2014 382 1,101 107 5 2,698 289 4,582 8 5 2,838 1,026 1,743 4,582
2015 757 876 163 5 2,510 533 4,844 6 7 3,117 1,014 1,727 4,844
2014 368 0 1,078 (93) 1,354 (1,033) 0 (1,032) (293) 100 (311) (8) (512) (191) 321 0.33
2019E 695 783 117 4 2,384 570 4,552 962 225 2,474 1,010 2,078 4,552
2018E 428 0 551 (250) 729 (449) 0 (449) 6 0 0 0 6 286 280 0.29
2017E 0.2% 178.6% ‐217.9% 38.0% 27.0% 9.8% 7.1% 5.7% 20.0%
2019E 3,778 (2,099) 1,679 (939) 1,302 (563) 740 (96) 30 673 (135) 0 0 539 0.56 539 0.56 0.22
2018E 468 741 114 4 2,489 559 4,374 912 325 2,664 1,010 1,710 4,374
2017E 222 0 540 (289) 474 (440) 0 (440) 44 0 0 0 44 78 34 0.03
2016 ‐16.2% ‐56.2% ‐264.4% 25.4% 9.7% ‐5.3% ‐3.3% ‐6.1% 11.2%
2018E 3,575 (2,044) 1,530 (919) 1,163 (551) 612 (106) 30 535 (107) 0 0 428 0.44 428 0.44 0.18
2017E 181 649 108 4 2,591 537 4,070 762 469 2,788 1,010 1,282 4,070
2016 (102) 43 468 (1,029) (620) (611) 11 (599) 1,131 0 (100) (465) 565 (653) (1,219) (1.26)
2015 ‐13.4% ‐58.0% ‐72.1% 27.4% 18.6% 4.0% 3.3% 3.2% ‐10.5%
2017E 3,131 (1,942) 1,190 (883) 846 (540) 306 (114) 30 222 (44) 45 0 223 0.23 178 0.23 0.00
2016 104 648 130 4 2,691 563 4,139 718 469 3,080 1,010 1,060 4,139
2015 132 42 547 470 1,191 (666) 9 (657) (10) 0 (181) 33 (158) 376 534 0.53
2014 24.4% 102.3% ‐15.2% 31.7% 38.4% 13.3% 7.9% 8.9% 20.7%
2016 3,125 (2,331) 794 (959) 304 (468) (165) (83) 33 (215) 24 89 0 (102) (0.10) (191) (0.20) 0.00
2019E 539 0 563 (195) 906 (458) 0 (458) (50) 0 (171) 0 (221) 227 448 0.46
2018E 14.2% 37.4% 92.5% 42.8% 32.5% 17.1% 12.0% 12.0% 20.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2019E 5.7% 12.0% 25.8% 44.4% 34.5% 19.6% 14.3% 14.3% 20.0%
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TFD, TTL, NMG, NUSA.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Anti‐corruption Progress Indicator
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy DISCLAIMER
This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
Buy (17E TP Bt11.00)
Company Update
Close Bt9.20
Media & Publishing May 19, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged A very positive outlook for Healthcare and Beauty business Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.169
0.314
KT ZMICO vs. consensus Share data
36.1%
40.1%
Reuters / Bloomberg
RS.BK/RS TB
Paid‐up Shares (m)
1,009.94
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
9.00/269.00
Foreign limit / actual (%)
49.00/3.72
52 week High / Low (Bt)
11.80/5.95
Avg. daily T/O (shares 000) NVDR (%)
3,539.00 4.78
Estimated free float (%)
46.59
Beta
1.30
URL
www.rs.co.th
CGR
Anti‐corruption
n.a.
Anapat Wanuschaiyapruk Analyst, no 57076 [email protected] 66 (0) 2-624‐6289
Earnings revised up from more H&B sales At the analyst meeting, RS expressed a more bullish view on the Healthcare and Beauty business (H&B) but sees a soft outlook for media business. Sales of H&B made a new high in April at Bt95mn, compared to Bt60mn to Bt70mn per month in the first quarter. We think RS is moving in the right direction for H&B business. We revised up our core profit forecast due to a higher H&B sales forecast. Our 17E TP rises to Bt11.00. Maintain Buy. Soft Adex to tone down media growth outlook RS saw very soft media spending in 1Q17. Even though Nielsen reported Adex on digital TV growth of 7%YoY, it was mainly contributed by Workpoint channel. Consequently, CH8 is not likely to increase its ad rate for the remaining three quarters. The management expects CH8’s revenue in 2Q17 and 3Q17 to increase by 15% from 1Q17 (around Bt306mn). Thus, we believe our forecast at Bt1,445mn (assuming a utilization rate at 60%) looks achievable. We expect the gross margin of the TV business, which includes three satellite channels, to recover from ‐6% last year to 18% this year since costs will increase at a slower pace than revenue. H&B sales to hit management target In 1Q17, H&B generated total revenue of Bt199mn, with the highest monthly sales in March at Bt80mn. H&B sales in April already surpassed March’s at Bt95mn and the momentum has continued in May. The management is confident that H&B revenue will hit their target at Bt800mn this year. RS also signed partnership agreements with other product owners to utilize RS’s facility as a sales channel (RS’s TV network and call center team). By doing this, RS will receive the gross margin in return. We lift our sales forecast from Bt420mn to Bt703mn, still quite conservative compared to the actual sales. Note also that we have not factored in the revenue from sales from the partnership agreements. However, we revise down our gross margin assumption from 75% to 70% to reflect the actual results in 1Q17. Buy rating maintained We revise up net profit in 17E, 18E, and 19E by 54%, 16%, and 4%, respectively, mainly from the higher revenue forecast of H&B. Our 17E TP rises to Bt11.00 (from Bt10.70), with 19% upside. Maintain a Buy rating. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt)
2014 4,306 341 0.38 ‐13.6% 0.30 1.70
2015 3,729 122 0.12 ‐68.0% 0.10 1.78
2016 3,125 (102) (0.10) ‐186.3% 0.00 1.09
2017E 3,131 223 0.23 ‐320.7% 0.00 1.32
2018E 3,575 428 0.44 92.5% 0.18 1.76
2019E 3,778 539 0.56 25.8% 0.22 2.14
FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 24.54 5.95 5.45 3.2% 21.7% ‐21%
2015 76.57 14.18 5.21 1.1% 7.2% ‐43%
2016 ‐88.69 32.39 8.52 0.0% ‐7.4% 102%
2017E 40.18 11.63 7.03 0.0% 19.2% 82%
2018E 20.87 8.46 5.26 1.9% 28.8% 45%
2019E 16.59 7.55 4.32 2.4% 28.6% 24%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 2: CH8’s ad rate and utilization rate
Ad rate
Source: RS, KT Zmico Research
Figure 3: TV revenue
Figure 4: Radio revenue
49 50
CH8
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
0
Sat/cab channels
Source: RS, KT Zmico Research
Source: RS, KT Zmico Research
Figure 5: H&B revenue and gross margin
Figure 6: Media revenue breakdown
(Bt'mn) 250
76%
77% 199
74%
73%
150
70% 69% 91
100
70 29
0.78
3,000
0.76
2,500
0.74
2,000
0.72
1,500
0.7
84 53
40
53
0.68
50
0.66 0.64
0
1,000 500
H&B
1,908 440 702
2,052
1,809
455
401
659
766
938
1,049
2014
2015
2016
Gross margin
Ch8
Source: RS, KT Zmico Research
Figure 7: Media and TV gross margin
Figure 8: H&B revenue
47% 37%
36%
32%
30%
26%
30% 9%
10% 0%
30%
18%
17%
20%
26%
35%
12%
‐6%
-10% 2013
2014
2015
2016
Media (TV+radio)
Source: RS, KT Zmico Research
2017E TV
2018E
2019E
20% 10% 0%
1Q17
4Q16
3Q16
1Q16
2Q16
2,354
2,089
326 294
319 324
359
Source: RS, KT Zmico Research
40%
30%
2,540 332 300
1,734
1,908
2018E
2019E
1,445
0
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
50%
40%
(Bt'mn) 77%
200
50
4Q16
95 103 89
3Q16
112
2Q16
50
130 113 96 89 58 54 53 40
50%
Utilization rate
1Q16
100
1Q15
150
4Q14
175
200
3Q14
250
60%
(Bt'mn) 200 173 180 160 160 141 140 129 140 119 117 111 108 120 103 101 100 82 75 80 60 40 20 0 2Q14
282 287 276 232 226 200 190 176 162
300
306
1Q14
(Bt'mn) 350
4Q15
Apr17
RS
4Q15
One
Feb17
Oct16
Dec16
Aug16
Jun16
Apr16
MONO
Source: AGB Nielsen, KT Zmico Research
2Q15
WORK
Feb16
Dec15
Oct15
Aug15
Jun15
Apr15
Feb15
Dec14
0.0
3Q15
0.2
3Q15
0.4
2Q15
0.6
1Q15
0.8
4Q14
1.0
3Q14
55% 40,000 52% 52% 50% 50% 50% 46% 35,000 45% 42% 41% 30,000 37% 32% 25,000 25% 20,000 15,000 10,000 5,000 0 2Q14
(Bt/min)
1.2
1Q14
1.4
1Q17
Figure 1: CH8’s rating
(Bt'mn) 1,000 900 800 700 600 500 400 300 200 100 0
2017E
Satellite TV
Radio
881
898
916
2018E
2019E
2020E
703
232
228
2015
2016
2017E
Source: RS, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
FINANCIAL TABLE PROFIT & LOSS (Btmn) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Extra Items Non‐controlling Net profit Reported EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories Investment PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity CASH FLOW (Btmn) Net income Non‐cash adjustment Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 4,306 (2,941) 1,365 (792) 1,652 (1,078) 574 (78) 23 519 (107) (44) (27) 341 0.38 385 0.43 0.30
2015 3,729 (2,707) 1,022 (875) 694 (547) 147 (81) 51 118 12 2 (10) 122 0.12 120 0.12 0.10
2014 382 1,101 107 5 2,698 289 4,582 8 5 2,838 1,026 1,743 4,582
2015 757 876 163 5 2,510 533 4,844 6 7 3,117 1,014 1,727 4,844
2014 368 0 1,078 (93) 1,354 (1,033) 0 (1,032) (293) 100 (311) (8) (512) (191) 321 0.33
2019E 695 783 117 4 2,384 570 4,552 962 225 2,474 1,010 2,078 4,552
2018E 428 0 551 (250) 729 (449) 0 (449) 6 0 0 0 6 286 280 0.29
2017E 0.2% 178.6% ‐217.9% 38.0% 27.0% 9.8% 7.1% 5.7% 20.0%
2019E 3,778 (2,099) 1,679 (939) 1,302 (563) 740 (96) 30 673 (135) 0 0 539 0.56 539 0.56 0.22
2018E 468 741 114 4 2,489 559 4,374 912 325 2,664 1,010 1,710 4,374
2017E 222 0 540 (289) 474 (440) 0 (440) 44 0 0 0 44 78 34 0.03
2016 ‐16.2% ‐56.2% ‐264.4% 25.4% 9.7% ‐5.3% ‐3.3% ‐6.1% 11.2%
2018E 3,575 (2,044) 1,530 (919) 1,163 (551) 612 (106) 30 535 (107) 0 0 428 0.44 428 0.44 0.18
2017E 181 649 108 4 2,591 537 4,070 762 469 2,788 1,010 1,282 4,070
2016 (102) 43 468 (1,029) (620) (611) 11 (599) 1,131 0 (100) (465) 565 (653) (1,219) (1.26)
2015 ‐13.4% ‐58.0% ‐72.1% 27.4% 18.6% 4.0% 3.3% 3.2% ‐10.5%
2017E 3,131 (1,942) 1,190 (883) 846 (540) 306 (114) 30 222 (44) 45 0 223 0.23 178 0.23 0.00
2016 104 648 130 4 2,691 563 4,139 718 469 3,080 1,010 1,060 4,139
2015 132 42 547 470 1,191 (666) 9 (657) (10) 0 (181) 33 (158) 376 534 0.53
2014 24.4% 102.3% ‐15.2% 31.7% 38.4% 13.3% 7.9% 8.9% 20.7%
2016 3,125 (2,331) 794 (959) 304 (468) (165) (83) 33 (215) 24 89 0 (102) (0.10) (191) (0.20) 0.00
2019E 539 0 563 (195) 906 (458) 0 (458) (50) 0 (171) 0 (221) 227 448 0.46
2018E 14.2% 37.4% 92.5% 42.8% 32.5% 17.1% 12.0% 12.0% 20.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2019E 5.7% 12.0% 25.8% 44.4% 34.5% 19.6% 14.3% 14.3% 20.0%
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TFD, TTL, NMG, NUSA.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Anti‐corruption Progress Indicator
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy DISCLAIMER
This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
