BEC World
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Just a bad episode
Thanks to robust adspend, BEC should report another record
performance in 3Q12. Its recent share price weakness owing to
litigation against an anchor reporter and fears of fiercer competition
from satellite TV and digital TV should offer a buying opportunity.
We remain confident about BEC’s
ability to boost ad revenue in the
medium term and believe that
consensus forecast is too conservative,
leaving potential for upside.
Downside is limited as the estimated
revenue impact of replacement of the
anchor’s programmes is 4-5%. We
raise our target price as we roll it
forward to end-13, still using blended
DCF and PEG. Maintain Outperform.
Robust ad industry
Nielsen reported the highest adspend
growth in five quarters of 11% yoy in
3Q12, which reflects resilient
domestic consumption against a
subdued global economic backdrop.
Although TV adspend lost traction to
other media formats as it rose only
8% yoy, historical data points
affirmed that BEC has consistently
produced higher ad revenue growth.
Fuelled by better audience share,
BEC’s revenue is expected to grow
13% yoy in 3Q12.
Sorayut’s litigation
BEC’s share price has been under
pressure since reports emerged that
the National Anti-Corruption
Commission (NACC) will file a suit
against its anchor reporter, Mr.
Sorayut Suthatsanajinda, for bribery
when his show was aired on MCOT in
2005-6. Although Mr. Sorayut’s
programmes generate 20% of BEC’s
ad revenue, we estimate a worst-case
revenue impact of only 4-5%.
Record performance
We expect another record quarter in
3Q12, with core net profit rising 27%
yoy and 1% qoq to THB1.25bn or 75%
of our full-year estimate. Our FY12-14
estimates are 6-25% above consensus
forecasts. We believe that the market
has underestimated adspend growth
potential and BEC’s pricing power.
TTop buy
We maintain our earnings estimates
but raise our target price by 3% to
THB65 as we roll it forward to end-13
while maintaining our valuation basis
of a blend of DCF and PEG. BEC’s
promising earnings growth of 23% in
FY13 should justify its 19x FY13 P/E.
It is an Outperform and our top pick.
