To UOB Kay Hian, the company's future hinges mainly on the capability of the new president - yet to be appointed - as well as the strength and vision of the new management team.

The securities company has cut the earnings forecast of the company due to Mingkwan's departure, coupled with several drawbacks such as a reduction in advertising revenue from government agencies, a softening market share, as well as declining income from implementing the integrated marketing communications (IMC) plan.

As a result, UOB Kay Hian has revised down its MCOT earnings forecasts for 2007 and 2008 by 11.6 per cent and 18.2 per cent, respectively. The new net-profit forecasts for the two years are Bt1.526 billion and Bt1.581 billion.

It maintained the 2006 forecast at Bt1.466 billion as advertising spending is usually booked one to three months in advance. Therefore, Mingkwan's departure in September should not yet be factored into the fourth-quarter result.

"The departure of a marketing expert like Mingkwan Sangsuwan is a great loss as he was actually behind the success of MCOT, turning the station from a mere government television outlet into a fully commercial broadcaster. It will take another one or two months to find Mingkwan's replacement. To our knowledge, most candidates are media men or professors, not marketing experts. Therefore, we are sceptical that MCOT can repeat its past success," it said in a research paper released last week.

Though MCOT recently had top programme producers like WorkPoint, Polyplus, JSL and Grammy's Exact/Scenario signing further one-year contracts until September 2007, it does not guarantee that MCOT can maintain its ratings and advertising revenue, given the lack of marketing strength and efficient implementation of IMC, areas in which Mingkwan specialises.

In addition, its advertising revenue from government agencies, which represents 30-35 per cent of its overall ad revenue, is likely to decline given that the current government is opting for a more conservative management style rather than the lavish and aggressive style that characterised the previous administration.

Advertising income from government agencies is predicted to fall by 10 per cent in both 2007 and 2008. Ad revenue from the private sector is predicted to rise by 10 per cent and 5 per cent, respectively.

"Net profit growth in the next two years is likely to drop from around 15 per cent per annum in the previous forecast to only 4-5 per cent per annum," Hian said.

Still, the securities company recommended investors hold the stock. It attributed the recommendation to the high yield and modest prospective price/earnings ratio. Despite the political undercurrents, MCOT, which positions itself as an edutainment channel, will not be much affected by the 24-hour ban on liquor advertising, which is expected to affect overall advertising expenditure in all media by 3 per cent, or Bt2.6 billion.

UOB Kay Hian's fair value for the stock is Bt31.60, down from Bt44.80, given the reduction of the earning forecasts as well as a lower annual long-term growth rate.

MCOT shares closed at Bt30.50 on Friday.