Bec World (BEC)
Q2 2012 profit exceeds expectation, growing 22%. Upgrade to "HOLD"
Bec World Plc (BEC)
2Q12 profit exceeds expectation, growing 22% YoY and 12.7% QoQ
2Q12 net profit has exceeded expectation, growing both 22% YoY and 12.7% QoQ as a result of advertising income that has increased by 11% QoQ due to recognition of income from increased advertising fee, decreased discount of some programs and stretched broadcast of programs with high advertising rate for the first full quarter. Moreover, there is an extra income from being partnership in live broadcast of 2012 European Football Championship while the income from concerts and shows has doubled from the previous quarter partly from Lady Gaga concert, urging the total growth of income from selling and service by 17.2% YoY. However, the high cost of show
arrangement has pushed the gross profit to decline by 54.7% in 1Q12 to 52.5%. Fortunately, this is compensated by SG&A/sales that has fallen from 12% to 11.5% due to company’s effective
expense control.
Revise up 2012-13 forecast 5.5% averagely to reflect profit higher than expected
As a result of 2Q12 profit that is higher than projected, 1H12 net profit stands at 55% from FY2012 forecast while the income from advertising fee in 2H12 tends to grow continuously due to the increased advertising fee of “Reunglao Sao-Athit” from B260,000/min to B290,000/min, which has been affective since 1 July 2012. Furthermore, there is an extra income from sharing live broadcast of London Olympic 2012 with the TV Pool of Thailand in late of July to the middle of August, so we revise up our 2012-13 profit forecast by average 5.5%/year under the new assumption that 2012 net profit will stand at B4,505m, growing 27.6% from the prior year and growing continuously by 10.5% in 2013.
Price almost fully valued but dividend yield still appealing. Upgrade to “HOLD”
Fair value, using DCF, is B53.80 which is slightly higher than the current price. Nevertheless, 2012 and 2013 dividend yields are above 4%, going XD on 20 August 2012 with 1H12 yield at
B1/share or 1.9% dividend yield. Therefore, we upgrade our recommendation from “SELL” to “HOLD” to receive dividend.
