RS share price shoots up as net profit soars 184% on-quarter

A stock analyst at KGI Securities (Thailand) said RS first quarter net profit was 76 per cent better than the company expected and 41 per cent higher than market expectations.
“If the extra profit of Bt13 million is not included, the company’s first quarter net profit would be Bt173 million, up 58 per cent year-on-year and 164 per cent quarter-on-quarter – 63 per cent better than the company expected,” he said.
The analyst explained that RS’s revenue in the first quarter of this year was Bt984 million, up 6 per cent year-on-year and 10 per cent quarter-on-quarter as revenue from its television business hit Bt336 million, up 47 per cent year-on-year and 93 per cent quarter-on-quarter.
“Meanwhile, revenue from its commercial business was Bt500 million, down 11 per cent year-on-year but up 8 per cent quarter-on-quarter,” he said.
“The company’s profit margin increased to 55.6 per cent from 41.9 per cent in the fourth quarter of last year due to the increase in television revenue, especially sales of content.”
However, the analyst expected RS’s second quarter performance to drop both year-on-year and quarter-on-quarter due to an overall decline in company revenue and profit.
“The revenue from its music and concert businesses is expected to drop as the company had to refrain from organising entertainment shows during the Covid-19 crisis,” the stock analyst said.
“In addition, sales of content are not likely to increase because we expect the company’s partners to save on costs in producing content to cope with the Covid-19 situation in the second quarter of this year.”
He said RS’s profit forecast in 2020 and 2021 was put at Bt378 million and Bt451 million, increasing by 4 per cent and 19 per cent year-on-year, respectively.
“We recommend that investors buy this stock as the company’s compound annual growth rate in 2020 and 2021 is 11 per cent,” he added.