Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/major-cineplex-group-pcl" target="_blank" data-smartkarma-citation="entities:16662:1" rel="noopener">Major Cineplex Group (MAJOR TB)</a> is quickly becoming a stock that dividend junkies could start to look at more closely. 1) With an 8.5% FCF yield ( based on my FY20 numbers ),  <a href="https://www.smartkarma.com/entities/major-cineplex-group-pcl" target="_blank" data-smartkarma-citation="entities:16662:1" rel="noopener">Major Cineplex Group (MAJOR TB)</a>  could fast pay off its debts and start to distribute more dividend by increasing its payout ratio ( from the already high 85% levels in 2018 ). Currently the dividend yield on the stock is 5.3% for FY19 based on a 100% payout for a 1.3 baht/share EPS. 2) With a net debt of 3.5 bn (as on Q3 2019 ) and market value of investment in associates ( listed ) of 4.9 bn , this <a href="https://www.smartkarma.com/entities/major-cineplex-group-pcl" target="_blank" data-smartkarma-citation="entities:16662:1" rel="noopener">Major Cineplex Group (MAJOR TB)</a> could  sell its investments becoming net cash and distribute more dividend to shareholders.  With a 8.5% FCF Yield if the company decided to distribute 80% of free cash as dividend this stock will probably trade up 20-30%. Risks :1) Content is king in the industry. If box office is not good due to quality of movies released, it could affect earnings and cashflow. The imminent line up of movies suggests that may not be the case.2) We are seeing weakness in consumption in Thailand which could spillover into this space.3) The company decides to use the cash to make an investment which the market does not like.  The founder Vicha Poolvaraluck, is known to make investments in other companies. In his defense though the decisions he has made so far have been very accretive to the company for e.g investments in <a href="https://www.smartkarma.com/entities/pvr-ltd" target="_blank" data-smartkarma-citation="entities:10144:1" rel="noopener">PVR Ltd (PVRL IN)</a> , <a href="https://www.smartkarma.com/entities/siam-future-development-pcl" target="_blank" data-smartkarma-citation="entities:4373:1" rel="noopener">Siam Future Development (SF TB)</a>  etc.  4) In the short term there could be headwinds in Q4 2019, since there was such great revenue growth last year.

Major Cineplex Group (MAJOR TB) is quickly becoming a stock that dividend junkies could start to look at more closely. 1) With an 8.5% FCF yield ( based on my FY20 numbers ),  Major Cineplex Group (MAJOR TB)  could fast pay off its debts and start to distribute more dividend by increasing its payout ratio ( from the already high 85% levels in 2018 ). Currently the dividend yield on the stock is 5.3% for FY19 based on a 100% payout for a 1.3 baht/share EPS. 2) With a net debt of 3.5 bn (as on Q3 2019 ) and market value of investment in associates ( listed ) of 4.9 bn , this Major Cineplex Group (MAJOR TB) could  sell its investments becoming net cash and distribute more dividend to shareholders.  With a 8.5% FCF Yield if the company decided to distribute 80% of free cash as dividend this stock will probably trade up 20-30%. Risks :1) Content is king in the industry. If box office is not good due to quality of movies released, it could affect earnings and cashflow. The imminent line up of movies suggests that may not be the case.2) We are seeing weakness in consumption in Thailand which could spillover into this space.3) The company decides to use the cash to make an investment which the market does not like.  The founder Vicha Poolvaraluck, is known to make investments in other companies. In his defense though the decisions he has made so far have been very accretive to the company for e.g investments in PVR Ltd (PVRL IN) , Siam Future Development (SF TB)  etc.  4) In the short term there could be headwinds in Q4 2019, since there was such great revenue growth last year. 

Major Cineplex : Core FCF Yield of 8.5% , Deleveraging and Dividend Payout Increase on the Cards ?

Thailand

Major Cineplex Lifestyle Leasehold Property Fund is a closed-end fund incorporated in Thailand. The Fund's objective is to achieve capital appreciation. The Fund invests in the leasehold rights of two large lifestyle entertainment complexes in Thailand.

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Maj Cineplex Ls Lease Prop F (MJLF TB)

Major Cineplex : Core FCF Yield of 8.5% , Deleveraging and Dividend Payout Increase on the Cards ?

Major Cineplex Group (MAJOR TB) is quickly becoming a stock that dividend junkies could start to look at more closely. 1) With an 8.5% FCF yield (...

Sameer Taneja

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