STOCK FOCUS
MCOT
Seamico Securities has maintained its "buy" recommendation on MCOT shares, with a revised fair value of Bt28.54 apiece.
The brokerage expects a change in television programming to result in a reduction in revenues. However, the popularity of MCOT's Channel 9 is increasing compared with the past. Coupled with the strengthening of its business structure, the broker expects MCOT's profitability to be sustained.Additionally, the current share price is trading with a 19-per-cent upside, and MCOT is expected to provide a 7-per-cent dividend yield for this year's performance. Therefore, the broker views a 14-per-cent decline in share price over the past two weeks as a reflection of overconcern about negative factors. The brokerage expects MCOT will replace its two current news talk programmes run by Sorrayuth Suthassanachinda - "Khui Khui Khao" and "Thueng Luk Thueng Khon" - with another news talk programme next year produced by The Nation. It conservatively predicts this will cause revenues to decline 6 per cent from its previous forecast for next year, or about Bt250 million to Bt260 million annually. The broker believes Sorrayuth's decision to pull his programmes was a result of a certain dispute with the station. Thus, it expects no other programme producers to follow in his footsteps. The revamping of the station's programming over the past four years has resulted in a considerable increase in the number of viewers. Therefore, MCOT will maintain its earnings next year at favourable levels and not turn in as poor a showing as widely expected. Even though the current managing committee plans to turn MCOT into a public-service and knowledge-based channel, in line with the current trend, a programme's format is a major factor in grabbing viewers' attention. The broker believes the new president to be selected early next year will not overlook this point, and therefore the change in management should not affect the channel's popularity, unless its policy changes. The possibility for MCOT's delisting is minimal, since before MCOT was listed on the SET, the Office of the Council of State said its privatisation did not breach the Frequency Allotment Organisation Act. The company has also confirmed that the privatisation process was completely transparent and executed to the letter of the law. This case will have a different effect from the Electricity Generating Authority of Thailand's, because MCOT was already listed. In the worst-case scenario - delisting - the broker believes the government will buy back all of the shares at a fair price, possibly no lower than the initial public offering price of Bt22 a share. Therefore, MCOT has little downside risk.
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