Major Cineplex Group

Major Cineplex Group Plc (MAJOR) 

 

Investment thesis 

The WestGate Cineplex was exclusively built to be included in Central WestGate, the second largest Central shopping complex after Central World and is classed as a “super-regional mall”, particularly for its location at the Bang Yai intersection of Kanchanapisek and Rattanathibet roads. The crowds that flocked from the many housing developments skirting the center when doors opened on August 28, and the 85% rental space opening day occupancy, bode well for the cineplex’s income, leading to a significant rise in the size of its audience. According to our marketing mix analysis (4Ps), we believe WestGate Cineplex will be successful and become one of Major’s earnings growth drivers. Our BUY rating stands.

Background

The world-standard facility covers around 8,920sqm and is on floors four and five. Its 12 cinemas equipped with Dolby Atmos surround-sound technology include IMAX, 4DX, VIP ultra-screen, childrens’ and seven digital cinemas (2,331 seats in total). Its main target for the weekend is families, while for weekdays, it aims to attract students of nearby institutions, such as Debsirin Nonthaburi School. The investment budget for the project is Bt250m, with a three-year expected payback period. It aims to accrue around 3-4% of Major’s total revenue.

Product

MAJOR is positioning the cineplex to take advantage of all segments: IMAX and VIP ultra-screens are to seat the high-income group and digital cinemas, the mid-low income groups. It features Thai dubbed and original soundtrack content, which can match the needs of various groups. There are also no such full-format cinemas in the area.

Price and Promotion

West Gate Cineplex’s average ticket price (ATP) is Bt220/ticket. If we exclude IMAX and 4DX, ATP is Bt160-Bt170/ticket. Data from the National Statistical Office indicated that the average monthly income per household during 1996-2013 in Nonthaburi is Bt31k, slightly lower than Bangkok (~Bt35k) but higher than Pathum Thani (~Bt23k) and Samut Prakan (~Bt21k). We calculate therefore that the ticket price is affordable, which means customers have the willingness to pay up to the ATP. Its promotional strategies are focused on pricing such as a discounted ticket prices or free tickets.

Place

Central WestGate is located in a strategic area for shopping, with its combination of a shopping mall and a lifestyle complex. The average consumer traffic is 100k/day and 80k/day for weekends and weekdays, respectively. We like its location at the major intersection that forms one of Greater Bangkok’s biggest western gateways, with easy access to the MRT Purple Line (which will begin operating next year).