Plan B Media

Plan B Media Plc (PLANB) 

Investment thesis

We have initiated coverage on PLANB with a BUY rating. It is the most diversified OOH media company and has the strongest revenue growth performance among readily comparable peers. Because PLANB is a growth stock, we believe the PEG method gives the best representation of its value. By pegging a PEG of 1.0x (conservative compared with VGI’s 1.2x) against our FY14-16 projected net profit CAGR of 52% for the firm, we arrived at a YE15 target price of Bt5.10. PLANB’s key investment themes are below.

Theme #1—impressive OOH ad spend growth outlook for 2014-16

Ad spend on out-of-home (OOH) media in Thailand posted a solid 2008-14 CAGR of 7.2%—more than 3x the growth rate of total ad spend for the same period of 2.1%. The drivers were the expansion of public transport infrastructure and modern trade retailing in tandem with changing lifestyles and consumer behavior. We project that Thai OOH media ad spend will rise by 9.6% YoY to Bt10.7bn in 2015 and by 12.9% to Bt12.1bn in 2016, a 2014-16 CAGR of 11.2%. Furthermore, our model indicates that the proportion of ad spend allocated to OOH media will increase from 9.5% of total spend in 2014 to 10.7% in 2016.

Theme #2—superior to its peers 

PLANB is the most diversified OOH media company. It covers transit, outdoor and in-store media and has a range of products for each category with an extensive portfolio of eye-catching locations across Bangkok and in major provincial cities. PLANB also has the strongest revenue growth performance among its readily comparable peers. Its revenue expanded from Bt680m in FY11 to Bt1.4bn in FY13, an FY11-13 CAGR of 42.7% against a peer average of 23.2%. The firm continues to dynamically innovate in order to offer new options for clients, which makes it stand out from the competition. 

Theme #3—upside from ad space expansion and new projects

There are three main components to PLANB’s ad space expansion strategy: 1) securing more locations in Bangkok and key provincial cities, 2) introducing new products and securing new concessions and 3) converting existing static outdoor platforms into digital platforms. The firm also has a slate of new OOH projects that it is launching this year across a range of platforms. The new projects will increase advertising space, expanding revenue generating capacity. We expect the new projects to comprise about 20% of the FY15 top-line. There is also scope for further top-line upside from the planned expansion of MRT lines.

Theme #4—robust FY14-16 earnings growth profile, a CAGR of 52.2%

PLANB has both a robust earnings profile and a healthy balance sheet. The firm’s FY09-13 net profit CAGR was a spectacular 95.1%. Our model indicates an FY14-16 net earnings CAGR of 52.2%, driven by revenue and GM expansion and lower interest expenses. The firm should have a net-cash position in FY15, which would enable it to pay dividends at a ratio of 50%.