Major Cineplex Group

Investment thesis

We assume that MAJOR’s 3Q14 ticket sales will increase 14% YoY due to a stronger movie line-up and the low base set by 3Q13. The expected YoY decline for September top-10 box office takings notwithstanding, the YoY July-August top-10 box office takings rise will make for strong ticket sales for the quarter. Moreover, other businesses remain solid—3Q14 concession revenue is estimated to have risen by 15% YoY and onscreen ad receipts by 4% YoY. Our BUY rating stands, premised on scope for upside from an exceptional movie line-up next year coupled with aggressive screen rollout plans.

YoY rise in July-August top-10 box office takings 

Thailand’s top-10 box office takings for July-August 2014 totaled Bt733m, up 8% YoY. July’s takings were Bt383m, up 12% YoY. August’s takings were Bt350m, up 4% YoY. The rise was due to a stronger movie line-up. Two films grossed near or over Bt100m in July-Aug 2014—Transformers: Age of Extinction (Bt136m in July; Bt308m in total) and Guardians of the Galaxy (Bt109m in total)—against only one movie in 2Q13—Pacific Rim (Bt114m).

Top-10 box office takings for Sept are estimated at Bt182m, down 10% YoY because of a weaker movie line-up for the month—The Maze Runner and Tookae Ruk Pang Mak (Chiang Khan Story). However, we model for Bt915m in top-10 box office receipts for 3Q14, up 4% YoY but down 36% QoQ (due to the seasonality—five movies grossed over Bt100m each in 2Q14—Captain America: The Winter Soldier, Transformers: Age of Extinction, The Amazing Spider-Man 2, X-Men Days of Future Past, King Naresuan 5 and Maleficent). 

MAJOR’s 3Q14 ticket sales expected to rise 14% YoY

We forecast MAJOR’s ticket sales at Bt409m for July, up 22% YoY, and Bt376m for August, up 14% YoY. We now expect Bt982m in 3Q14 ticket sales for the firm, up 14% YoY but down 32% QoQ. Concession revenue for 3Q14 is projected to have increased by 15% YoY and onscreen ad receipts by 4% YoY. As such, we preliminarily estimate a Bt265m net profit, up 32% YoY but down 41% QoQ.

Solid movie line-up in 4Q14 through FY15

The 4Q14 movie line-up looks much better than the 3Q14 line-up—The Equalizer, The Hunger Games: Mockingjay, Part 1, The Hobbit 3: There and back again and Paranormal Activity 5. Next year will usher in a line-up of Hollywood blockbusters—The Avengers: Age of Ultron, Star Wars VII, Man of Steel: Superman/Batman, Pirate of the Caribbean: Dead Men Tell No Tales, Fantastic Four Reboot, Terminator 5, The Hunger Games: Mockingjay, Part 2, James Bond 24, Snow White and the Huntsman 2, Jurassic Park IV, Mission Impossible 5 and Die Hardest.