Key Takeaways 11 Mar 2016 1 Please see disclaimer on last page GMM Grammy PCL (GRAMMY) Still not the time to invest ► Analyst meeting on 11 Mar 2016. ► Earnings should continue to improve, but still far from a turnaround. ► Huge investment in content during industry slowdown, so the stock is still not interesting. Business restructuring helps lower loss from last year GRAMMY has tried many things to improve its operating performance, the main thing being decreasing its holding in The ONE Enterprise Company Limited, operator of the channel “One”’ digital TV license, from 100% to 51% holding in March 2015, which helped GRAMMY book half of the net loss from ONE from 2Q15 onward. The company also divested its noncore businesses and booked extra revenues of Bt158mn last year. However, with the huge investment cost related to its digital TV businesses - GMM 25 and One 31 channel - while its TV rating and ad spending remain weak, the company reported a 2015 normalized loss of Bt889mn, improving from a loss of Bt1.0bn in 2014. Excluding net loss related to ONE, the 2015 normalized loss would be Bt276mn, improving from a loss of Bt588mn in 2014. Outlook still cloudy in 2016 As ad spending should grow slightly, GRAMMY’s digital TV businesses should gradually improve its advertising revenue following an improving TV rating. The company targets revenue from ONE of Bt1.8bn, up 71% YoY with a targeted TV rating of 1 by the end of this year from 0.3 at the end of 2014. For GMM 25, the company targets revenue of Bt800mn, up 100% YoY mainly from tie-in advertising revenue. However, even if it reaches these targets, it would not be enough to cover expected digital TV operating costs for this year. Recently GRAMMY announced it would cut more than 100 jobs in an effort to manage costs and to restructure the organization into a provider of total media solutions as the downturn in physical sales in music business was fueled by digital music which needs less staff. The company also decided to outsource its call center operation to improve efficiency on its core businesses, but this may not be much help in lowering SG&A expenses. The company’s outlook remains cloudy as its two digital TV channels still build themselves up, so the stock is not interesting yet. Not rated TP: N.A. Closing price: Bt7.10 Upside/downside N.A. Sector Media & Publishing Paid-up shares (shares mn) 819.95 Market capitalization (Bt bn) 5.82 Free float (%) 22.74 12-mth daily avg. turnover (Bt mn) 1.52 12-mth trading range (Bt) 15.30/7.00 Major shareholders (%) Paiboon Damrongchaitham 47.89 Thaveechai Jrurangkool 16.11 Nattapol Jurangkool 7.61 Thailand Research Department Ms. Sukanya Leelarwerachai License, No. 68790
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Key Takeaways 11 Mar 2016
1
Please see disclaimer on last page
GMM Grammy PCL (GRAMMY)
Still not the time to invest
► Analyst meeting on 11 Mar 2016.
► Earnings should continue to improve, but still far from a
turnaround.
► Huge investment in content during industry slowdown, so the
stock is still not interesting.
Business restructuring helps lower loss from last year
GRAMMY has tried many things to improve its operating
performance, the main thing being decreasing its holding in The
ONE Enterprise Company Limited, operator of the channel “One”’
digital TV license, from 100% to 51% holding in March 2015, which
helped GRAMMY book half of the net loss from ONE from 2Q15
onward. The company also divested its noncore businesses and
booked extra revenues of Bt158mn last year. However, with the
huge investment cost related to its digital TV businesses - GMM 25
and One 31 channel - while its TV rating and ad spending remain
weak, the company reported a 2015 normalized loss of Bt889mn,
improving from a loss of Bt1.0bn in 2014. Excluding net loss related
to ONE, the 2015 normalized loss would be Bt276mn, improving
from a loss of Bt588mn in 2014.
Outlook still cloudy in 2016
As ad spending should grow slightly, GRAMMY’s digital TV
businesses should gradually improve its advertising revenue
following an improving TV rating. The company targets revenue
from ONE of Bt1.8bn, up 71% YoY with a targeted TV rating of 1 by
the end of this year from 0.3 at the end of 2014. For GMM 25, the
company targets revenue of Bt800mn, up 100% YoY mainly from
tie-in advertising revenue. However, even if it reaches these targets,
it would not be enough to cover expected digital TV operating costs
for this year. Recently GRAMMY announced it would cut more than
100 jobs in an effort to manage costs and to restructure the
organization into a provider of total media solutions as the downturn
in physical sales in music business was fueled by digital music
which needs less staff. The company also decided to outsource its
call center operation to improve efficiency on its core businesses,
but this may not be much help in lowering SG&A expenses. The
company’s outlook remains cloudy as its two digital TV channels still
build themselves up, so the stock is not interesting yet.
Not rated
TP: N.A.
Closing price: Bt7.10
Upside/downside N.A.
Sector Media & Publishing
Paid-up shares (shares mn) 819.95
Market capitalization (Bt bn) 5.82
Free float (%) 22.74
12-mth daily avg. turnover (Bt mn) 1.52
12-mth trading range (Bt) 15.30/7.00
Major shareholders (%)
Paiboon Damrongchaitham 47.89
Thaveechai Jrurangkool 16.11
Nattapol Jurangkool 7.61
Thailand Research Department
Ms. Sukanya Leelarwerachai
License, No. 68790
2
Please see disclaimer on last page
CG Report
Score Range Number of Logo Description 90 – 100 80 – 89 70 – 79 60 – 69 50 – 59
Below 50
No logo given
Excellent Very Good
Good Satisfactory
Pass N/A
Corporate Governance Report disclaimer
The disclosure of the survey result of the Thai Institute of Directors
Association (“IOD”) regarding corporate governance is made pursuant
to the policy of the Office of the Securities and Exchange Commission.
The survey of the IOD is based on the information of a company listed
on the Stock Exchange of Thailand and the Market for Alternative
Investment disclosed to the public and able to be accessed by a
general public investor. The result, 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 date, Asia wealth Securities Company
Limited does not conform nor certify the accuracy of such survey result.
Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2015.
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