Target price : Bt9.85
Recommendation : BUY
Closing Price (7 May 09) : Bt7.05
1Q09 net profit to be down 74.74% YoY but up 77.07% QoQ
- Total revenue is forecast to edge marginally down 0.94% YoY in 1Q09 due to a weak lineup of blockbuster movies released during the quarter and a drop in bowling and cinema ad revenues. Costs and expenses are
expected to edge upwards following the opening of a new branch in 2H08.
- Given the absence of exceptional gains on sale of cinema space back to Central World and sale of its subsidiary M Picture to Traffic Corner and a sharp fall in profit contribution from affiliates, we expect movie theater operator MAJOR to achieve net profit of Bt76.13m in 1Q09, down 74.74% YoY but up 77.07% QoQ.
- Despite low profit expectations in 1Q09, a strong lineup of blockbuster movies to be released later this year should drive revenue and profit higher during the remaining course of the year. For the time being, we keep our 2009 full-year net profit outlook unchanged at Bt650.54m. We maintain a BUY stance on MAJOR with a price target of Bt9.85/share.
1Q09 net profit to be down 74.74% YoY but up 77.07% QoQ
We expect MAJOR, Thailand's biggest cinema chain operator to achieve total revenue of Bt1,204.23m in 1Q09, down a marginal 0.94% YoY and 12.85% QoQ. The top-line decline reflects a weak lineup of blockbuster movies released during the quarter. In 1Q09, ticket receipts for top ten grossing movies at the Thai box office dropped 15% YoY and 32% QoQ. Cinema admission revenue is however forecast to fall modestly thanks to sales of M-Cash cards. F&B revenue as a percentage of ticket sales is expected to rise. Bowling and cinema ad revenues are predicted to fall in the face of deteriorating economic conditions. Rental income and income from CVD/DVD business are forecast to edge up. Costs are predicted to drift slightly lower 0.58%. Administrative expenses should rise 6.09% following the opening of a new branch in 2H08. Given the absence of exceptional gains on sale of cinema space back to Central World and sale of its subsidiary M Picture to Traffic Corner and a sharp fall in profit contribution from affiliates, reflecting the opening of Major Avenue a year earlier, we expect MAJOR to achieve net profit of Bt76.13m in 1Q09, down 74.74% YoY but up 77.07% QoQ, reflecting the absence of exceptional charges for Major Cineplex Lifestyle Property Fund (MJLF).
2009 estimates unchanged despite low profit expectations in 1Q09
Despite low profit expectations in 1Q09, a strong lineup of blockbuster movies to be released later this year should drive revenue and profit higher during the remaining course of the year. For the time being, we keep our 2009 full-year net profit outlook unchanged at Bt650.54m. Note that the estimated upfront lease fees of about Bt300m-Bt400m from standalone Major Rattanathibet Cineplex are not yet built into the forecast. Our price target is also unchanged at Bt9.85/share, based on a P/E multiple of 12x. We maintain a BUY stance on MAJOR.
By Phillip Securities (Thailand) Plc. on May 11, 2009
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