KGI Maintains ‘Outperform’ Rating for MAJOR as Local Films Support Ticket Sales

KGI Securities maintained an ‘Outperform’ rating for Major Cineplex Group Public Company Limited (SET: MAJOR) as the firm foresaw a positive outlook for the company.

MAJOR’s ticket sales remained stagnant year-on-year in April-May, with local films like “Lahn Mah,” exceeding ticket sales of over THB 200 million, and “My Boo (A-Nong)” standing out for their strong performances. Meanwhile, Hollywood movies continued to struggle to attract audiences. MAJOR anticipates the release of more than 30 Thai films in 2H24, which is expected to drive revenue growth for the remainder of the year.

Looking ahead, Hollywood films are projected to make a comeback in 2025F, with highly anticipated blockbusters like “Avatar 3,” “Fast and Furious 11,” and “Captain America: Brave New World” hitting the screens. Concession and advertising revenue are expected to mirror the trends in box office earnings, as the industry prepares for a shift towards recovery and growth in the coming years.

The utilization of pricing strategies has been instrumental in boosting attendance for local films and attracting audiences in upcountry areas, resulting in a decrease in the proportion of box office revenues generated in Bangkok and its vicinity.

KGI has reduced earnings forecasts by 5% for 2024F and 6% for 2025F, following a downward revision of the average ticket price (ATP) assumption from THB 152 to THB 143. Consequently, the analyst anticipated net profits of THB 826 million in 2024F (-21% YoY) and THB 961 million in 2025F (+17% YoY).

In the upcoming 2Q24F, the analyst projects MAJOR’s earnings to exhibit quarter-on-quarter growth, driven by the high season for movies. However, on a year-on-year basis, earnings are expected to decline due to the company’s disposal of holdings in 2Q23, while MAJOR is poised to record a one-time tax income of THB 85 million in 2Q24F-3Q24F, anticipated to positively impact its financial performance during this period.

KGI maintains an ‘Outperform’ rating for MAJOR, supported by its robust balance sheet, projected attractive dividend yield ranging from 5-6% in 2024F-2025F, and the upside to the new target price of THB 13.80.