Major Cineplex Group

Major Cineplex Group Plc (MAJOR)

What’s new? According to Boxofficemojo website and our estimates, Thailand’s top-10 movies during July-August 2012 grossed Bt719m, down 12% YoY. Disaggregated by month, July’s box office takings dived 25% YoY to Bt377m, due to the high base set by July 2011 with the screening of Transformers 3 (Bt294m in total; Bt220m in July) and Harry Potter 7.2 (Bt202m in total; Bt188m in July). In July 2012, there were only two blockbusters—Dark Knight Rises (Bt130m in total; Bt106m in July) and The Amazing Spiderman (Bt138m in total; Bt98m in July).
August takings rose 7% YoY to Bt342m, led by Total Recall (Bt57m) and The Expendables 2 (Bt47m). In August 2011, King Naresuan 4 screened (Bt130m).
Flat to modest growth of 3Q12 box-office takings: The July-August decline in takings was due to the high base set by July-August 2011 and the relatively weak popularity of various major films—Total Recall, The Bourne Legacy, the Amazing Spiderman and Rak Jed Pee Dee Jed Hon. Receipts were slightly below management guidance at the 2Q12 analyst meeting. But we expect Sept box office takings to bounce YoY, due to the low base set by Sept 2011 takings and the Sept 2012 blockbuster, Resident Evil 5. We anticipate flat to modest growth in 3Q12 box office takings.
4Q12 ticket sales recovery: Despite subdued 3Q12 ticket sales, the 3Q12 bottom-line will be boosted by stronger onscreen ad revenue and good OPEX control. We preliminarily forecast a Bt220-230m net profit for 3Q12, up 2-7% YoY. 4Q12 earnings will jump YoY, due to a stronger movie line-up in 4Q12—King Naresuan 5, Twilight 4.2, the Hobbit—and the low 4Q11 earnings related to the flooding. A slew of blockbuster sequels is scheduled for FY13—Iron Man 3, Thor 2, The Hobbit 2, Die Hard 5, G.I. Joe 2, Superman: Man of Steel, 300: Battle of Artemisia, Hunger Games 2, Fast & Furious 6, Wolverine 2, After Earth.
Action: Flattish 3Q12 earnings will be followed by a bottom-line recovery in 4Q12 and a strong movie line-up next year. MAJOR remains our top pick in the Media sector.