Plan B Media

Plan B Media Plc (PLANB)

Despite the sharp correction in the share price over the past month, we continue bullish on the stock for the long view, with unchanged DCF-based target price of Bt8.5. True, our economy is not getting back up as strongly as expected – and we cut 2016F in response – but the LT outlook remains excellent. The consistent addition of capacity and new businesses (like football) will give it bargaining edge with advertisers when the economy turns back up. PLANB is a growth stock with EPS CAGR of 36% in 2016-18. BUY.  

 

Positive tone: PLANB joined our Media Day on Friday. Key takeaways: 

 

 PLANB emphasized that the sharp correction over the past month was not in response to a change in its solid long-term fundamentals. Major shareholders and top management remain committed and have not divested shares. 

 

 For its transit business, PLANB says it is joining hands with SET-listed BEM to bid for the rights to operate mass transit in Kuala Lumpur (KL), Malaysia. Though success of this bid is uncertain, it does indicate the close relationship between PLANB and BEM and puts paid to the speculation that BEM will handle its own subway ads instead of signing on PLANB.

 

 For its digital business, the firm is now completing the rollout of 60 new digital screens in 45 provinces and is looking for advertisers to invest in them.

 

It is certain that its digital screens in the provinces will do as well as in those in Bangkok since the population base is higher. PLANB expects revenue from these to start in 3Q16.

 

 For the football business, PLANB expects to be able to bring in revenue in 2H16 ahead of the official start of the contract in January 2017. It is working to sell potential clients on the idea that it is worth investing in teams other than the national team, such as those for youth – the under-14s (U14) and under-16s (U16) - and futsal. If it can persuade clients of the viability of this move, it might bring in income as early as 2H16. It leaves unchanged its 2017 target revenue of Bt800mn (vs. Bt453mn made by former operator Siam Sport). 

 

Revise down forecast - but only for 2016. We have revised our 2016 forecast, bringing it down 24% to Bt414mn (from Bt580mn) to incorporate the softer economy. We cut our assumed utilization rate to 65% from 75% as we assume the sluggish economy will make it more difficult to fill up the capacity added in 2016. We leave unchanged our revenue and earnings forecasts for 2017 and on, as fundamentals remain strong and we believe only 2016 will be hit by the soft economy. 

 

Maintain BUY with DCF-based TP of Bt8.5. Since we revised only our 2016F, the impact on our DCF-based target price is not meaningful. We leave our target price at Bt8.5 and still Buy. We still see PLANB as a growth stock as it continues to expand. We note that the earnings growth in 2017 will be even higher than forecast, since we have yet to factor revenue from its new football business into our 2017 model.