วันพุธที่ 27 พฤษภาคม พ.ศ. 2552

Kim Eng Stock Market Report Recommends Buy on Weakness BEC

BEC World Plc (BEC) - BUY ON WEAKNESS

Price (Bt) 19.70
Target (Bt) 25.50
Set Index 540.22

Recovery signs seen for 2Q09

Improving ad revenues
Following the BEC World’s (BEC) analyst’s meeting yesterday, we have

nigerian stock market report
turned more positive on the industry with better BEC prospects after a disappointed 1Q09 result. The 2Q09 is likely to recover along with the seasonal impact, increasing ad spending on Channel 3 in April and the rising ad bookings in May. The major advertisers have allocated ad budgets to Channel 3, including Unilever, the biggest spender, who have cut the advertising from Channel 7.

Lower ad spending on Channel 7 after discount cut
The market leader, Channel 7, cut ad discounts to 0% in March for prime-time programmes aired in
the 6.00-10.30pm period. The effective ad rate is thus relatively high compared with other TV stations. A
number of big advertisers have moved to other TV stations. Unilever, representing 9% of TV ad spending, cut
ads on Channel 7 by 79% yoy and 85% yoy in March and April, respectively. The station’s share of Unilever
ads thus stood at only 7% in April, from 42% in 2008. The other major ad spenders have also reduced their
ads on Channel 7, including Beiersdorf, Nestle and P & G with ad reductions of 31%, 42% and 45%,
respectively.

Channel 3 gained more ads from major advertisers
According to Nielsen Media Research in April, Channel 7 ads slipped 24.1% yoy, while Channel 3
saw 2.5% yoy growth. The growth area was in non-prime slots. With a 2.7% increase in the Unilever ad budget
for April, the giant advertiser spent 96% more on Channel 3, bringing the station share to 47%, from 28% in
2008. Channel 3 also enjoyed significant growth of advertising allocated by the other main advertisers,
Beiersdorf, Johnson & Johnson and Coca-Cola.

Earnings revised down to reflect a soft 1Q09 performance
Even with the signs of a recovery in 2Q09, we have revised down our 2009 and 2010 earnings
forecast by 5% and 3%, respectively, to reflect the softer 1Q09 profit representing only 19% of our
previous projection. The 2009 earnings are now expected at Bt2,706mn (Bt1.35/share) or a 7% decrease from
last year. Our assumption is based on expected marginal growth in revenues and a lower gross margin due to
higher programming costs following the programme revamp with new programmes and expanding evening drama
airtime.

Weaker share price offers buying opportunity
The dividend yield is forecast to remain attractive at 6% despite our earnings downgrade. The
weakened share price now offers a buying opportunity. We rate a BUY ON WEAKNESS with a revised fair value
estimate of Bt25.50 derived from our DCF.

Earnings summary
Year End Dec 31 2006 2007 2008 2009F 2010F
Sales (Btmn) 6,775 7,786 8,798 8,876 9,483
EBITDA (Btmn) 3,941 4,887 5,752 5,628 6,063
Normalised earnings (Btmn) 1,643 2,226 2,902 2,706 2,951
Earnings (Btmn) 1,643 2,252 2,875 2,706 2,951
EPS (Bt) 0.82 1.13 1.44 1.35 1.48
PER (x) 24 17.5 13.7 14.6 13.4
EV/EBITDA (x) 9.3 7.3 6.1 6.1 5.6
Free cash flow (Btmn) 1,916 2,866 2,917 2,974 3,127
CF/share (Bt) 1.7 2.2 2.2 2.2 2.3
BVPS (Bt) 3 3.2 3.5 3.6 3.9
P/BV (x) 6.5 6.1 5.6 5.5 5.1
DPS (Bt) 0.75 1.05 1.35 1.25 1.3
Dividend yield (%) 3.80% 5.30% 6.90% 6.30% 6.60%
Net debt/equity (x) Cash Cash Cash Cash Cash
ROA (%) 23.40% 29.20% 34.10% 30.60% 31.50%
ROE (%) 27.30% 35.10% 41.50% 37.00% 38.10%
Source : Company reports and KELIVE Research estimates.

By Kim Eng Securities (Thailand) Company Limited on May 19, 2009

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