Major Cineplex Group

THAILAND EQUITY RESEARCH

Page | 1 | PHILLIP SECURITIES (THAILAND)

Major Cineplex Group 1QFY16 net profit up 13.8%, 2QFY16 outlook bright on lining up blockbuster movies THAILAND | SET | MEDIA | COMPANY VISIT BLOOMBERG MAJOR TB l REUTERS MAJOR.BK 1QFY16 net profit up 13.8% y‐y on higher revenue and gain on investment MAJOR’s 1QFY16 net profit grew 13.8% y‐y to Bt226mn on higher revenue and gain on investment. Revenue from sales and services increased 10.7% y‐y to Bt1,936mn as a greater number of box office movies and stronger revenue from food & beverage and ad revenue offset losses on bowling/karaoke, rental income and MPIC. Other income shot up 15.8% as MAJOR recorded a Bt65mn gain on investment vs Bt43mn a year ago. Total cost rose 10.5% on higher cost of cinemas and food & beverage which were in tandem with revenue and screen count. SG&A expense increased 15.7% along with higher screens, and profit contribution from associates grew 10.7%. In the first quarter, MAJOR registered three box office movies‐‐Deadpool, Gods of Egypt and Batman V Superman: Dawn of Justice—that generated more than Bt100mn each while there was only one box office movie at Bt76mn a year earlier. An addition of 90 screens from 1QFY15 to 610 in 1QFY16 drove admissions up 13% y‐y to 6.3mn and average cinema ticket price up 3% to Bt164. Ticket sales increased 20.9% while food & beverage revenue jumped 23.9% and ad revenue grew 15.3%. By contrast, bowling/karaoke revenue edged down 2.2% while rental income fell 10.6% and MPIC down 58.1%. 2QFY16 net profit to top high base in 2QFY15 on multiple blockbuster movies We expect 2QFY16 net profit to beat strong profit of Bt491mn MAJOR reported in 2QFY15 as the company has enjoyed box office movies thus far‐‐Captain America: Civil War (Bt450mn) and Thai film Luang Pee Jazz 4G (Bt380mn). As the Thai film was produced by MPIC, we expect MAJOR’s gross margin to improve in the period. More important is there will have soon‐to‐be‐released movies e.g., X‐Men: Apocalypse (generating more than Bt120mn currently), Warcraft (May 26), Independence Day 2 Resurgence, Angry Birds, Teenage Mutant Ninja Turtles 2, Finding Dory, etc. MPIC will also release three movies in the second quarter. Lining‐up new releases to be aired in 2HFY16 are Hollywood blockbusters: Suicide Squad, Doctor Strange, The Legend of Tarzan, The Inferno, Fantastic Beasts and Where to Find Them, Rogue One: A Star Wars Story, Jumanji, Ghostbusters; and 11 Thai films—MPIC (eight movies), GDH555 (two), T Moment (one). As for screen count, MAJOR has planned to add 24 screens in 2QFY16, including nine screens that were opened in early quarter, and 62 in the second half of the year—most of which would be in the fourth quarter and in the upcountry to support growing Thai film industry and MPIC movie production. FY16 earnings projection unchanged, rating maintained at ‘NEUTRAL’ with Bt31.50 target price We keep our sales and services revenue and net profit forecast unchanged at Bt9,589mn and Bt1,409mn, respectively. Our target price is Bt31.50, pegged to historical average 20x P/E. At current share price, we reiterate a ‘NEUTRAL’ rating on MAJOR.

Ref. No.: CO2016_0431

Closing Price(Bt) 31.25Target Price(Bt) 31.50 (+5.09%)

COMPANY DATA

O/S Shares (mn) : 893 Market Cap. (Btmn) :Market Cap. (USDmn) :52‐WK Hi/Lo (Bt) : 44/23.73M Average Daily T/O (mn) : 2.58Par Value (Bt) : 1.00

MAJOR SHAREHOLDERS (%)

1. Mr. Vicha Poolvaraluck 32.92. Thai NVDR Co., Ltd. 6.23. State Street Bank and Trust Company 5.1

PRICE PERFORMANCE (%)

1MTH 3MTH 1YRABS 3% 26% ‐10%REL TO SET INDEX 5% 21% ‐2%

PRICE VS SET INDEX

Source: Bloomberg, PSR

KEY FINANCIALS

FYE Dec FY14 FY15 FY16E FY17ESales(Btmn) 8,623 8,580 9,539 10,290Net Profit(Btmn) 1,086 1,171 1,409 1,605EPS (Bt) 1.22 1.32 1.58 1.80P/E (X) 25.6 23.7 19.8 17.4BVPS (Bt) 7.20 7.18 7.45 7.90P/B (X) 4.3 4.4 4.2 4.0DPS (Bt) 1.05 1.15 1.34 1.53Dividend Yield (%) 3.4 3.7 4.3 4.9ROE (%) 17.37 18.30 21.61 23.44Source: Company, PSR Est.**Multiples and yields are based on latest closing price

VALUATION METHOD

P/E'16 (20x)

Siam TiyanontSecurities Investment Analyst #17970Tel: 66 2 635 1700 # 483

27,893 780

19 April 2016

Neutral (Maintain)

25 May 2016

01020304050

May‐13 May‐14 May‐15 May‐16

MAJOR TB EQUITY SETI (rebased)


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.

No logo given

Number of Logo

Results Presentation



Anti‐corruption indicators

Level 5 (Extended)BCP CPN GYT PE PM PPP PT PTT PTTGC SAT sccTHANI TOP

Level 4 (Certified) DCC DTC DRT EASTW ECL EGCO ERW FSS GCAP HANA HTCINTUCH IRPC IVL KBANK KCE KGI KKP KTB LANNA LHBANK MTINKI PSL PTG PTTEP SABINA SCB SNC SNP SSF SSSC TCAP

THCOM TISCO TMB TMD TNITY TOG

Level 3 (Established)

Level 3A: Declaration to join CAC, etcABC ACAP ADVANC AGE AH AMANAH ANAN AP APCS APURE ASASIA ASIAN ASIMAR BIGC BROOK BTS BWG CEN CENTEL CFRESH CHARANCHO CHOTI CM CNT COL CPF CPI CPL DELTA DEMCO DIMETDNA DTAC EA ECF EE EVER FPI GBX GC GFPT GLOWHMPRO HOTPOT ICC ICHI IFEC INOX INSURE IRC JAS JTS JUBILEKC KTC KYE LHK LPN LRH MAKRO MC MCOT MFC MFECMINT MJD MONO MOONG NBC MSC NDR NINE NMG NSI NTVOGC PACE PCSGH PDI PG PHOL PLAT PPS PR PRANDA PREBPS QLT RATCH RML ROBINS ROJNA RWI SAMCO SCCC SCG SEAOILSE‐ED SENA SINGER SITHAI SMK SMPC SPALI SPC SPCG SPI SRICHASSI STANLY SUPER SVI SYMC SYNEX SYNTEC TASCO TCMC TFI THAITHRE THREL TICON TKT TLUXE TMILL TMT TNL TPCORP TSTE TSTH

TTCL TU TVI UOBKH UREKA VGI VNT WACOAL WHA ZMICO

Level 3B: Organization's statement but no declaration to join CAC, etcAAV AHC AIT AKR ARROW ASK BA BDMS BEC BJCHI BUICGH CHG CHOW CIG CITY CK CKP COLOR CWT EARTH EASONEPG F&D FANCY FIRE FMT FORTH GENCO GL GOLD GPSC GRAMMYHYDRO IRCP IT JCT KCM KWC LH LIT LOXLEY MACO MANRINMATI MODERN MSC NOBLE NOK NPK NUSA OISHI OTO PAF PAPPATO PF PJW PLANB PLE POLAR PRG PTL Q‐CON QTC RCIS11 SALEE SAM SAMART SAMTEL SAPPE SC SCP SFP SIM SLPSMT SPA SPORT SSC SST STEC STPI SUC SUTHA SVI TTBSP TAE TCC TFD TGCI TGPRO THANA THIP TIW TK TMWTNDT TOPP TPC TPCH TPIPL TSR TT TYCN UAC UBIS UECUMI UP UPF UT UV VPO WAVE WINNER YUASA

Level 2 (Declared)2S ABICO AF AKP AMARIN AMATA AOT APCO AYUD BEAUTY BFITBH BKD BLAND BTNC CCP CI CSR CSS EFORL EPCO FEFNS FVC GEL GLOBAL HEMRAJ IEC IFS INET JUTHA KASET KCARKKC KSL L&E LALIN LTX M MALEE MBK MBKET MEGA MKMPG MTLS NCH NCL NPP OCC OCEAN PB PCA PRINC QHROCK RPC S & J SGP SIAM SIS SKR SMG SMIT SORKON SUSCOTAKUNI TEAM TF TIC TIP TIPCO TMC TMI TPP TRT TRUTRUE TSC TSI TTW TVD TVO UKEM UNIQ UWC VNG WIIKWIN XO

Level 1 (Committed)ACD AEONTS AFC AIRA AJ ALUCON AMC AQUA ARIP AUCT BAT‐3KBIG BJC BOL BRR BSBM CBG CCET CCN CGD CMR CPHCSC CSP CTW DCON DRACO DSGT DTCI E EMC ESSO FOCUSFSMART GIFT GLAND GRAND GUNKUL HFT HTECH ILINK ITD JSP IHLKDH KTIS KTP LEE LST MAJOR MAX M‐CHAI MDX MIDA MATCHML MPIC NC NEP NNCL OHTL PICO PK PL PPM NWRPRAKIT PRECHA PRIN PSTC RAM RICH RS SANKO SAUCE SAWAD PYLONSAWANG SCN SEAFCO SHANG SIRI SMART SMM SOLAR SPACK SPG SFSPPT SPVI STAR SVH SVOA SWC TAPAC TC TCCC TCJ STATCOAT TKS TNH TNPC TPA TPAC TPOLY TRC TRUBB TSE TTATTI TTL TTTM TWP TWZ U UMS UPA UPOIC UVAN UTPVARO VI VIBHA VIH VTE WG

Data not available/No policyA ACC AJD AQ BCH BGT BROCK BSM BTC CHUO CRANECPR EIC FER JMART JMT KAMART KBS KIAT LDC MCS METCOMBAX NEW NEWS NYT PAE PDG PERM PMTA RCL RICHY ROHPOST S SIMAT TCB TR TSF TVT



Anti‐corruption indicators

Level 5 : Extended

Anti‐corruption policies extend to business partners, dealers, and distributors.

Level 4 : Certified

Anti‐corruption policies can be engaged by audit committee and auditors approved by the SEC.

Anti‐corruption policies are certified by CAC and independent assurance providers.

Level 3 : Established

Anti‐corruption corruption policies cover anti‐bribery, and communications and educating all employees anti‐corruption policies.

Level 3A Public out statement to join CAC, etc.

Level 3B Declare statement and organization’s anti‐corruption policies but no intention to join CAC, etc.

Level 2 : Declared

Declare statement to participate CAC against corruption.

Level 1 : Committed

Organization and Board of Directors’ statements against corruption and not getting involve in any malpractices.

AssessmentAnti‐corruption progress indicator for listed companies is a part of SEC’s commitment to create sustainability in anti‐corruption and to become a role model to any

related business. The progress indicators comprise of five levels: 1) Committed, 2) Declared, 3) Established, 4) Certified, and 5) Extended. These indicators will

encourage listed firms to formulate anti‐corruption policies to opt out of corruption, and investors can determine their investment based on anti‐corruption indicator

or avoid investment in listed firms that could get involve in corruption.



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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Major Cineplex Group

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