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Published on March 31, 2008

After posting strong results last year, BEC is considered a favourite play for some securities firms this year.

Its revenue last year was up 15 per cent to Bt7.79 billion and its net earnings rose 37 per cent to Bt2.25 billion.

In the past three months, 21 researchers have analysed BEC. Of he total, 16 gave it a "buy" rating while the rest made "neutral", "hold" and "Sell" recommendations.

Out of Bt53.48 billion in ad spending last year, BEC took a 25-per-cent share of the market. It has continued to perform well in the first two months of this year, the brokerages said.

Vice president Chatchai Thiamthong said BEC posted strong revenue growth last year due to higher ad spending and lower sales and administrative costs.

In the wake of big events this year such as the Beijing Olympics and Euro 2008 football, BEC has increased prices on ads aired on prime time from Bt420,000 to Bt450,000 per minute as of February.

After May 1, prices for pre-drama slots will rise to Bt330,000 from Bt290,000.

Chatchai said the Broadcasting Act had taken effect, describing the reform as 'a blessing in disguise' for BEC as the industry is forced to become more transparent and orderly.

He said long-awaited investment opportunities in the local market should open up for BEC, adding, "BEC World is more than Channel 3."

"As our operating costs and expenses are mostly fixed, BEC has high operating leverage," said Chatchai, adding that the company's profitability was expected to improve markedly this year.

KGI Securities is optimistic about BEC's management strategy and guidance. It said BEC's prime time slots would still be in high demand.

KGI, therefore, sees limited downside risk in advertising revenue for the firm.

It also said BEC's news programming could be a strong driver, as it has seen more upside in utilisation rates for news content this year.

Though competition from other channels has risen, such as plans to transform Channel 11 into a modern TV station, KGI said BEC did not face many threats this year.

Relaxed alcohol advertising restrictions, coupled with major sporting events, should boost late-night and daytime ad rates.

With regards to MCOT's proposal to raise BEC's concession fees, it said this was not a near-term possibility as current contractual provisions make such a move difficult.

Given the positive outlook with solid earnings growth this year, KGI said BEC would continue posting double-digit growth, It ranks the stock "outperform", with a target price of Bt30.

UOB Kay Hian ( Thailand ) Securities said allowing Channel 11 to run ads should not impact BEC's income significantly.

It maintains a 15-per-cent growth forecast for BEC's net profit this year. The surge should be backed by an upturn in ad spending, improved consumer confidence and higher fees for advertising.

BEC's management said major clients like Unilever, after cutting 50 per cent of its ad budget recently, would be back to spending at its usual level in the next two months.

Tisco Securities said BEC would benefit from the regulatory changes for at least another year.

The broker favours BEC as it has a strong competitive position and good earnings potential.

BEC offers dependable and attractive cash returns to shareholders of about 5-6 per cent a year with a clean balance sheet, Tisco said. It also does not have major investment plans in the next few years.

Sasithorn Ongdee

The Nation