Investor applause greets improved performances

Big names hog the stage but some smaller players are also sharpening up their acts

Bamrung Amnatcharoenrit

Listed entertainment and recreation companies have received a warm welcome from investors in recent years, but three of the nine companies in the sector tend to attract the lion's share of attention.

They are GMM Grammy Plc, the country's largest entertainment group; BEC World Plc, the operator of television Channel 3; and United Broadcasting Corporation Plc (UBC), the pay-television operator.

Grammy topped the Shareholder Scorecard for the sector, producing a one-year return of 131%, followed by City Sports at 73% and UBC at 60%. Struggling theme park operator Safari World trailed the field at -23%.

BEC World, which accounts for 67% of the sector's market capitalisation, delivered a modest 2% one-year return and 5% over five years. However, the sector's five-year average was -6.6%.

UBC is finally beginning to turn the corner after five years of losses that totalled 12.5 billion at the end of last year. A growing subscriber base, improved revenue and lower operating costs are contributing to an improved performance.

The company's first-half net loss fell to 17.3 million baht (0.02 baht a share), from 966.46 million baht (4.30 baht a share) in the same period last year. UBC made its first quarterly profit, 10.9 million baht, in the second quarter.

Analyst had earlier projected UBC to lose one billion baht this year but they are now revising their forecasts.

At the other end of the performance scale, Safari World Plc and Digital Onpa International Plc continue to deal with losses and debt restructuring.

Akaradej Rojmeta, chief executive of Digital Onpa, a blank tape and disc producer, said restructuring and the elimination of poorly performing businesses were expected to help the company get back on track next year.

But analysts said continuing disagreements among shareholders also represented a challenge for Digital Onpa.

Jarasrak Watanasingha, an analyst at KGI Securities (Thailand) Plc, said Grammy, BEC World and UBC outperformed others in the sector due to their strong fundamentals and future prospects.

Grammy has been reaping the benefits of the decision it made in August last year to cut the retail prices of its CDs and VCDs by 50% in a bid to curb piracy and encourage purchases of copyrighted products. As a result, in the first half of this year, Grammy sold 3.7 million CDs, 164% more than in the same period last year. VCD sales rose 431% to 6.9 million units. Its first-half net profit was 285.2 million baht, up 252% year-on-year.

The outlook for Grammy is expected to improve further when it spins off its media business and lists it separately on the SET in November.

GMM Media Plc, formerly known A-Time Media Co, will increase its registered capital to 200 million baht from 26 million baht before becoming listed.

BEC World, remains optimistic about its prospects despite a drop in net profit. The company reported an 18% decline in net profit in the first half of this year to 784.33 million baht, from 956.22 million in the same period last year.

However, analysts said the performance of Channel 3 remained strong and BEC was considered the blue chip stock in the entertainment sector.

Chatchai Thiamtong, vice-president for finance of BEC World, believed profit would improve in the second half as positive signs were emerging such as the return of growth in the advertising industry, renewed consumer confidence and the upward revision of economic projections by the government.

In October, BEC World plans to increase its commercial airtime rates from the current 360,000 baht per minute during prime-time soap operas. The increase, postponed from last year, is projected to be between 8% and 10% in line with advertising industry growth. _Bamrung Amnatcharoenrit

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