Mono Technology
Mono Technology Outperform (17E TP Bt3.78)
Company Update
Close Bt3.42
Media & Publishing June 1, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Earnings growth down the road Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS Bt)
0.076
0.126
KT ZMICO vs. consensus Share data
‐7.9%
11.1%
Reuters / Bloomberg
MONO.BK/MONO TB
Paid‐up Shares (m)
3,343.94
Par (Bt)
0.10
Market cap (Bt bn / US$ m) Foreign limit / actual (%)
11.00/336.00 49.00/1.22
52 week High / Low (Bt)
4.10/2.20
Avg. daily T/O (shares 000)
18,568.00
NVDR (%)
1.30
Estimated free float (%)
29.29
Beta
1.68
URL
www.mono.co.th
CGR
Anti‐corruption
Level 4 (Certified)
Anapat Wanuschaiyapruk Analyst, no. 57076 [email protected] 66 (0) 2-624‐6289
Looking forward to decent earnings growth…maintain Outperform MONO29 stands at number four in the digital TV industry with a TV rating at 0.691 or an 8% audience share in April. We believe that its TV business will continue to support strong earnings growth for the remaining three quarters. Maintain Outperform. TV to drive growth MONO29’s channel rating and audience share in April was 0.691 (4+, 24 hours, nationwide) and 8%, respectively, up from 0.537 and 6.7% in Apr‐16. We think MONO29 is already well known among TV watchers and its free movie strategy has yielded a wonderful outcome as the ad rate in 1Q17 grew 89%YoY to Bt26,000/min. The implied Cost‐Per‐Rating‐Point (CPRP) at Bt15,000 is cheaper than Bt20,000 of Workpoint channel. However, the cheaper price came with a higher utilization rate for ad time, which was at 84% in 1Q17 vs. 60% ‐ 70% for the other top six peers. We maintain our full‐year forecast of TV revenue at Bt1,623mn, +60% from last year. The strong TV business will also help lift up the total gross margin from 21% in 16 to 29% since TV costs will go up by a lesser extent than revenue. No more movies from T Moment this year After the unsuccessful ticket sales of T Moment’s first movie “Oversize” (which were around Bt15mn), MONO decided to postpone the second movie until next year. This means that there will be no swing factor for MONO’s bottom line this year. We did some fine‐tuning to our forecast but there is no impact to the bottom line since we have assumed no profit from T Moment’s movies. Expect strong 2Q17E results We preliminarily forecast 2Q17E net profit at Bt89mn, +580%YoY and 285%QoQ. We expect the top line to grow 23%YoY driven by revenue from MONO29 (Bt464mn, +47%YoY) while mobile content should remain very flat. The gross margin is forecasted at 38%, +8% from 2Q16 and 1Q17 on the effect from operating leverage. Maintain Outperform The current stock price implies 17E PER and PEG at 40x and 0.4x, which is undemanding in our view. Our 17E TP still offers upside of around 10%. With a positive earnings outlook for the remaining three quarters, we maintain an Outperform rating. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EP S growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 1,526 (12) (0.00) ‐102.5% 0.16 0.95 2014 ‐1,268.29 60.11 3.64 4.7% ‐0.4% ‐20%
2015 1,893 (487) (0.11) 3816.9% 0.00 0.78 2015 ‐32.38 60.40 4.40 0.0% ‐18.2% 28%
2016 2,077 (250) (0.05) ‐48.7% 0.00 0.74 2016 ‐63.13 16.25 4.65 0.0% ‐10.4% 61%
2017E 2,686 310 0.07 ‐224.2% 0.00 0.99 2017E 50.83 8.94 3.48 0.0% 10.7% 24%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2018E 3,167 642 0.14 107.2% 0.00 1.18 2018E 24.54 6.99 2.93 0.0% 17.1% 10%
2019E 3,584 922 0.20 43.6% 0.00 1.44 2019E 17.09 5.89 2.39 0.0% 20.3% ‐6%
Figure 1: MONO’s 2Q17 earnings preview Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Other extraordinary Items Gn (Ls) from affiliates Net profit (loss) Normalized profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%)
2Q16 587 180 250 (35) 7 (2) 0 (0) 13 13 0.00 30.7 42.6 2.2
1Q17 637 191 299 (35) 10 (4) 0 0 23 23 0.01 30.0 47.0 3.6
2Q17E 724 274 384 (35) 12 (22) 0 0 89 89 0.03 37.9 53.1 12.3
% YoY 23.3 52.3 53.5 (0.5) 74.2 n.m. n.m. n.m. 580.4 580.4 548.9
% QoQ 13.6 43.5 28.4 (1.4) 22.8 n.m. n.m. n.m. 284.4 284.4 280.1
6M17E 1,362 465 684 (70) 22 (26) 0 0 112 112 0.03 34.2 50.2 8.2
2017E 2,686 1,048 1,458 (141) 39 (77) 0 0 310 310 0.09 39.0 54.3 11.5
% YoY 26.3 67.8 67.9 1.0 72.3 n.m. n.m. n.m. (267.1) (267.1) (229.8)
% YoY 29.3 136.7 81.8 (2.8) 8.5 n.m. n.m. n.m. (224.2) (252.6) (214.7)
% 17E 50.7 44.4 46.9 50.0 55.8 n.m. n.m. n.m. 36.2 36.2 37.6
Sources: MONO, KT Zmico Research
Figure 2: TV rating and MONO29’s revenue
Figure 3: Ad rate and utilization rate
(Bt'mn) 600
(TVR) 0.80 0.70
500
0.60 400
0.50
300
0.40 0.30
200
0.20 100
0.10
0
2Q17E
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
0.00
(Bt'k/min) 50 45 40 35 30 25 20 15 10 5 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17E Ad rate
120% 100% 80% 60% 40% 20% 0%
Utilization rate
Source: MONO, KT Zmico Research
Source: MONO, KT Zmico Research
Figure 4: TV and mobile content revenue
Figure 5: Gross profit margin
(Bt'mn)
70.0%
400
60.0%
350 300
50.0%
250
40.0%
200
30.0%
150
Commencement of MONO29
20.0%
100
10.0%
50
0.0%
Source: MONO, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
Mar17
Sep16
Dec16
Jun16
Mar16
Dec15
Jun15
Sep15
Mar15
Ad revenue
Source: MONO, KT Zmico Research
‐10.0%
1Q13
MVAS
Dec14
Jun14
Sep14
Mar14
Dec13
Sep13
Jun13
Mar13
0
Dec16
Mar17
Jun16
Sep16
Dec15
Mar16
Jun15
SG&A‐to‐revenue
Source: MONO, KT Zmico Research
Sep15
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
Mar13
SG&A
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
0
Mar15
50
Sep14
100
Dec14
150
Jun14
200
Dec13
250
Mar14
45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
300
Jun13
Figure 7: Capex (Bt'mn) 500 450 400 350 300 250 200 150 100 50 0
Sep13
Figure 6: Expenses (Bt'mn)
Source: MONO, KT Zmico Research
Figure 8: Revenue and gross margin forecast
Figure 9: Net gearing ratio
(Bt'mn)
80.0%
6,000
70%
5,000
60% 50%
4,000
60.0% 40.0%
40% 20.0%
3,000
30%
2,000 1,000
MONO29
Mobile
Source: MONO, KT Zmico Research
Other
2020E
2019E
2018E
2017E
2016
2015
2014
2013
0
GPM
0.0%
20% ‐20.0% 10% ‐40.0% 0% ‐60.0% ‐80.0% 2012
2013
2014
2015
2016
2017E 2018E 2019E 2020E
Source: MONO, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
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 Gain (loss) from affiliates Extra Items Non‐controlling Net profit Reported EPS Fully diluted 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 1,526 (1,011) 515 (588) 217 (290) (73) (81) 77 (77) 64 0 0 0 (12) (0.00) (0.00) (12) (0.00) 0.16
2015 1,893 (1,653) 240 (680) 216 (655) (439) (133) 32 (540) 54 0 0 0 (487) (0.16) (0.11) (487) (0.16) 0.00
2016 2,077 (1,634) 443 (525) 802 (885) (83) (145) 36 (192) (10) (2) (46) 0 (250) (0.08) (0.05) (203) (0.08) 0.00
2017E 2,686 (1,637) 1,048 (559) 1,458 (969) 489 (141) 39 387 (77) 0 0 0 310 0.09 0.07 310 0.09 0.00
2014 998 578 8 0 3,569 248 5,400 13 409 2,489 308 2,911 5,400
2015 195 554 10 0 4,154 365 5,278 146 734 2,854 310 2,424 5,278
2016 87 530 9 51 4,315 400 5,392 196 1,342 3,026 320 2,366 5,392
2017E 437 685 9 51 4,317 407 5,906 241 1,003 2,476 498 3,431 5,906
2018E 3,167 (1,689) 1,478 (597) 1,865 (984) 881 (118) 40 803 (161) 0 0 0 642 0.19 0.14 642 0.19 0.00
2014 (12) 12 290 (118) 171 (1,659) 0 (1,659) 384 0 (174) 0 210 (1,279) (1,488) (0.32)
2015 (487) 33 655 (307) (105) (1,139) 0 (1,138) 441 52 (62) 0 432 (804) (1,244) (0.27)
2014 8.5% ‐57.6% ‐102.5% 33.8% 14.2% ‐4.8% ‐0.8% ‐0.8% 83.8%
2016 (250) 59 885 (430) 264 (1,042) (83) (1,125) 658 95 (0) 0 753 (107) (862) (0.19)
2015 24.0% ‐0.5% 3790.5% 12.7% 11.4% ‐23.2% ‐25.7% ‐25.7% 9.9%
2018E 728 807 9 51 4,292 413 6,301 241 903 2,228 498 4,073 6,301
2017E 310 0 969 (419) 860 (971) 0 (971) (294) 755 0 0 461 350 (111) (0.02)
2016 9.7% 271.8% ‐50.3% 21.3% 38.6% ‐4.0% ‐12.0% ‐9.8% ‐5.0%
2019E 1,320 914 9 51 4,270 418 6,983 241 803 1,988 498 4,995 6,983
2018E 642 0 984 (276) 1,350 (959) 0 (959) (100) 0 0 0 (100) 291 391 0.09
2017E 29.3% 81.8% ‐214.7% 39.0% 54.3% 18.2% 11.5% 11.5% 20.0%
2019E 3,584 (1,739) 1,845 (631) 2,213 (1,000) 1,213 (101) 41 1,153 (231) 0 0 0 922 0.27 0.20 922 0.27 0.00
2019E 922 0 1,000 (252) 1,670 (978) 0 (978) (100) 0 0 0 (100) 592 692 0.15
2018E 17.9% 27.9% 107.2% 46.7% 58.9% 27.8% 20.3% 20.3% 20.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
2019E 13.2% 18.7% 43.6% 51.5% 61.8% 33.9% 25.7% 25.7% 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, SAWAD.
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 5 of 5
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
Company Update
Close Bt3.42
Media & Publishing June 1, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Earnings growth down the road Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS Bt)
0.076
0.126
KT ZMICO vs. consensus Share data
‐7.9%
11.1%
Reuters / Bloomberg
MONO.BK/MONO TB
Paid‐up Shares (m)
3,343.94
Par (Bt)
0.10
Market cap (Bt bn / US$ m) Foreign limit / actual (%)
11.00/336.00 49.00/1.22
52 week High / Low (Bt)
4.10/2.20
Avg. daily T/O (shares 000)
18,568.00
NVDR (%)
1.30
Estimated free float (%)
29.29
Beta
1.68
URL
www.mono.co.th
CGR
Anti‐corruption
Level 4 (Certified)
Anapat Wanuschaiyapruk Analyst, no. 57076 [email protected] 66 (0) 2-624‐6289
Looking forward to decent earnings growth…maintain Outperform MONO29 stands at number four in the digital TV industry with a TV rating at 0.691 or an 8% audience share in April. We believe that its TV business will continue to support strong earnings growth for the remaining three quarters. Maintain Outperform. TV to drive growth MONO29’s channel rating and audience share in April was 0.691 (4+, 24 hours, nationwide) and 8%, respectively, up from 0.537 and 6.7% in Apr‐16. We think MONO29 is already well known among TV watchers and its free movie strategy has yielded a wonderful outcome as the ad rate in 1Q17 grew 89%YoY to Bt26,000/min. The implied Cost‐Per‐Rating‐Point (CPRP) at Bt15,000 is cheaper than Bt20,000 of Workpoint channel. However, the cheaper price came with a higher utilization rate for ad time, which was at 84% in 1Q17 vs. 60% ‐ 70% for the other top six peers. We maintain our full‐year forecast of TV revenue at Bt1,623mn, +60% from last year. The strong TV business will also help lift up the total gross margin from 21% in 16 to 29% since TV costs will go up by a lesser extent than revenue. No more movies from T Moment this year After the unsuccessful ticket sales of T Moment’s first movie “Oversize” (which were around Bt15mn), MONO decided to postpone the second movie until next year. This means that there will be no swing factor for MONO’s bottom line this year. We did some fine‐tuning to our forecast but there is no impact to the bottom line since we have assumed no profit from T Moment’s movies. Expect strong 2Q17E results We preliminarily forecast 2Q17E net profit at Bt89mn, +580%YoY and 285%QoQ. We expect the top line to grow 23%YoY driven by revenue from MONO29 (Bt464mn, +47%YoY) while mobile content should remain very flat. The gross margin is forecasted at 38%, +8% from 2Q16 and 1Q17 on the effect from operating leverage. Maintain Outperform The current stock price implies 17E PER and PEG at 40x and 0.4x, which is undemanding in our view. Our 17E TP still offers upside of around 10%. With a positive earnings outlook for the remaining three quarters, we maintain an Outperform rating. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EP S growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 1,526 (12) (0.00) ‐102.5% 0.16 0.95 2014 ‐1,268.29 60.11 3.64 4.7% ‐0.4% ‐20%
2015 1,893 (487) (0.11) 3816.9% 0.00 0.78 2015 ‐32.38 60.40 4.40 0.0% ‐18.2% 28%
2016 2,077 (250) (0.05) ‐48.7% 0.00 0.74 2016 ‐63.13 16.25 4.65 0.0% ‐10.4% 61%
2017E 2,686 310 0.07 ‐224.2% 0.00 0.99 2017E 50.83 8.94 3.48 0.0% 10.7% 24%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2018E 3,167 642 0.14 107.2% 0.00 1.18 2018E 24.54 6.99 2.93 0.0% 17.1% 10%
2019E 3,584 922 0.20 43.6% 0.00 1.44 2019E 17.09 5.89 2.39 0.0% 20.3% ‐6%
Figure 1: MONO’s 2Q17 earnings preview Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Other extraordinary Items Gn (Ls) from affiliates Net profit (loss) Normalized profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%)
2Q16 587 180 250 (35) 7 (2) 0 (0) 13 13 0.00 30.7 42.6 2.2
1Q17 637 191 299 (35) 10 (4) 0 0 23 23 0.01 30.0 47.0 3.6
2Q17E 724 274 384 (35) 12 (22) 0 0 89 89 0.03 37.9 53.1 12.3
% YoY 23.3 52.3 53.5 (0.5) 74.2 n.m. n.m. n.m. 580.4 580.4 548.9
% QoQ 13.6 43.5 28.4 (1.4) 22.8 n.m. n.m. n.m. 284.4 284.4 280.1
6M17E 1,362 465 684 (70) 22 (26) 0 0 112 112 0.03 34.2 50.2 8.2
2017E 2,686 1,048 1,458 (141) 39 (77) 0 0 310 310 0.09 39.0 54.3 11.5
% YoY 26.3 67.8 67.9 1.0 72.3 n.m. n.m. n.m. (267.1) (267.1) (229.8)
% YoY 29.3 136.7 81.8 (2.8) 8.5 n.m. n.m. n.m. (224.2) (252.6) (214.7)
% 17E 50.7 44.4 46.9 50.0 55.8 n.m. n.m. n.m. 36.2 36.2 37.6
Sources: MONO, KT Zmico Research
Figure 2: TV rating and MONO29’s revenue
Figure 3: Ad rate and utilization rate
(Bt'mn) 600
(TVR) 0.80 0.70
500
0.60 400
0.50
300
0.40 0.30
200
0.20 100
0.10
0
2Q17E
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
0.00
(Bt'k/min) 50 45 40 35 30 25 20 15 10 5 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17E Ad rate
120% 100% 80% 60% 40% 20% 0%
Utilization rate
Source: MONO, KT Zmico Research
Source: MONO, KT Zmico Research
Figure 4: TV and mobile content revenue
Figure 5: Gross profit margin
(Bt'mn)
70.0%
400
60.0%
350 300
50.0%
250
40.0%
200
30.0%
150
Commencement of MONO29
20.0%
100
10.0%
50
0.0%
Source: MONO, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
Mar17
Sep16
Dec16
Jun16
Mar16
Dec15
Jun15
Sep15
Mar15
Ad revenue
Source: MONO, KT Zmico Research
‐10.0%
1Q13
MVAS
Dec14
Jun14
Sep14
Mar14
Dec13
Sep13
Jun13
Mar13
0
Dec16
Mar17
Jun16
Sep16
Dec15
Mar16
Jun15
SG&A‐to‐revenue
Source: MONO, KT Zmico Research
Sep15
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
Mar13
SG&A
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
0
Mar15
50
Sep14
100
Dec14
150
Jun14
200
Dec13
250
Mar14
45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
300
Jun13
Figure 7: Capex (Bt'mn) 500 450 400 350 300 250 200 150 100 50 0
Sep13
Figure 6: Expenses (Bt'mn)
Source: MONO, KT Zmico Research
Figure 8: Revenue and gross margin forecast
Figure 9: Net gearing ratio
(Bt'mn)
80.0%
6,000
70%
5,000
60% 50%
4,000
60.0% 40.0%
40% 20.0%
3,000
30%
2,000 1,000
MONO29
Mobile
Source: MONO, KT Zmico Research
Other
2020E
2019E
2018E
2017E
2016
2015
2014
2013
0
GPM
0.0%
20% ‐20.0% 10% ‐40.0% 0% ‐60.0% ‐80.0% 2012
2013
2014
2015
2016
2017E 2018E 2019E 2020E
Source: MONO, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
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 Gain (loss) from affiliates Extra Items Non‐controlling Net profit Reported EPS Fully diluted 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 1,526 (1,011) 515 (588) 217 (290) (73) (81) 77 (77) 64 0 0 0 (12) (0.00) (0.00) (12) (0.00) 0.16
2015 1,893 (1,653) 240 (680) 216 (655) (439) (133) 32 (540) 54 0 0 0 (487) (0.16) (0.11) (487) (0.16) 0.00
2016 2,077 (1,634) 443 (525) 802 (885) (83) (145) 36 (192) (10) (2) (46) 0 (250) (0.08) (0.05) (203) (0.08) 0.00
2017E 2,686 (1,637) 1,048 (559) 1,458 (969) 489 (141) 39 387 (77) 0 0 0 310 0.09 0.07 310 0.09 0.00
2014 998 578 8 0 3,569 248 5,400 13 409 2,489 308 2,911 5,400
2015 195 554 10 0 4,154 365 5,278 146 734 2,854 310 2,424 5,278
2016 87 530 9 51 4,315 400 5,392 196 1,342 3,026 320 2,366 5,392
2017E 437 685 9 51 4,317 407 5,906 241 1,003 2,476 498 3,431 5,906
2018E 3,167 (1,689) 1,478 (597) 1,865 (984) 881 (118) 40 803 (161) 0 0 0 642 0.19 0.14 642 0.19 0.00
2014 (12) 12 290 (118) 171 (1,659) 0 (1,659) 384 0 (174) 0 210 (1,279) (1,488) (0.32)
2015 (487) 33 655 (307) (105) (1,139) 0 (1,138) 441 52 (62) 0 432 (804) (1,244) (0.27)
2014 8.5% ‐57.6% ‐102.5% 33.8% 14.2% ‐4.8% ‐0.8% ‐0.8% 83.8%
2016 (250) 59 885 (430) 264 (1,042) (83) (1,125) 658 95 (0) 0 753 (107) (862) (0.19)
2015 24.0% ‐0.5% 3790.5% 12.7% 11.4% ‐23.2% ‐25.7% ‐25.7% 9.9%
2018E 728 807 9 51 4,292 413 6,301 241 903 2,228 498 4,073 6,301
2017E 310 0 969 (419) 860 (971) 0 (971) (294) 755 0 0 461 350 (111) (0.02)
2016 9.7% 271.8% ‐50.3% 21.3% 38.6% ‐4.0% ‐12.0% ‐9.8% ‐5.0%
2019E 1,320 914 9 51 4,270 418 6,983 241 803 1,988 498 4,995 6,983
2018E 642 0 984 (276) 1,350 (959) 0 (959) (100) 0 0 0 (100) 291 391 0.09
2017E 29.3% 81.8% ‐214.7% 39.0% 54.3% 18.2% 11.5% 11.5% 20.0%
2019E 3,584 (1,739) 1,845 (631) 2,213 (1,000) 1,213 (101) 41 1,153 (231) 0 0 0 922 0.27 0.20 922 0.27 0.00
2019E 922 0 1,000 (252) 1,670 (978) 0 (978) (100) 0 0 0 (100) 592 692 0.15
2018E 17.9% 27.9% 107.2% 46.7% 58.9% 27.8% 20.3% 20.3% 20.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
2019E 13.2% 18.7% 43.6% 51.5% 61.8% 33.9% 25.7% 25.7% 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, SAWAD.
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 5 of 5
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
