Ad spending in Q3 boosts profit

Ad spending in Q3 boosts profit
The Nation (24 October 2007)

The media and publishing sector's third-quarter net profit is expected to surge 8.5 per cent year on year on the back of higher advertising spending.

Ayudhya Securities said in a statement that six media and publishing companies under its coverage would report a combined third-quarter net profit of Bt1.26 billion, up from Bt1.16 billion in the same period last year. The broker estimated that total advertising spending in the period rose 3.7 per cent year on year and 6.7 per cent quarter on quarter to Bt23.52 billion.

The main drivers were cinema and newspaper advertising, with 118 per cent and 7.7 per cent year-on-year growth, respectively. However, magazine and radio advertising are expected to decline 12 per cent and 4.2 per cent year on year, respectively.

Spending on television commercials is expected to grow 1.2 per cent year on year and 9.4 per cent quarter on quarter to Bt13.88 billion, thanks to higher billing at TITV with the delay in the government's plan to turn it into a public television station.

GMM Media is expected to be the best performer. The broker estimated that GMM Media's quarterly net profit would rise 133 per cent year on year, from Bt18 million to Bt42 million.

GMM Grammy is predicted to see a 60.27-per-cent rise, from a Bt73-million net profit in last year's third quarter to Bt117 million this year.

The solid earnings can be ascribed to a recovery in income from its music and concert business and a decline in operating costs.

BEC World, operator of Channel 3, is expected to post a third-quarter net profit of Bt586 million, up 37.3 per cent year on year.

Worldpoint Entertainment is expected to see year-on-year growth of 9.1 per cent in its third-quarter net profit, from Bt66 million to Bt72 million.

At the other end of the scale, Ayudhya Securities predicts cinema operator the Major Cineplex Group's third-quarter net profit will slump 26 per cent year on year to Bt140 million.

MCOT is expected to do the same camp as Major Cineplex. The Channel 9 operator is expected to show a 28.29-per-cent year-on-year decline in its third-quarter net profit, from Bt390 million to Bt304 million.

One Kim Eng Securities (Thailand) analyst was optimistic that advertising spending in the final quarter would improve on the back of advertising from the general election and the high season.

A clearer political situation will also boost domestic consumption next year, and this will be a boon to the media and publishing sector, although some may feel the pinch from implementation of television ratings and curbs on the advertising of snack foods during children's television programmes, the analyst said.

The broker is bullish on the sector in expectation of higher advertising spending propelled by increasing consumer confidence.