BANGKOK — Asia Plus Securities predicts 2025 to be a golden year for the movie industry. MAJOR Cineplex Group Public Company Limited (MAJOR) is expected to post excellent earnings in Q4/2024 thanks to a slew of blockbuster releases and cost-cutting strategies. The valuation is considered attractive with additional upside potential from a share buyback program. The price target is set at THB 20.
Prasit Rattanakijkamol, CFA, CISA, Analyst at Asia Plus Securities, predicts that MAJOR will perform remarkably in Q4/2024 despite a slight decline in box office receipts compared to Q4/2023. Last year’s results were boosted by three Thai films — “The Undertaker” (THB 730 million), “Death Whisperer” (THB 500 million) and “4 Kings 2” (THB 250 million) — which together generated substantial revenues.
In Q4/2024, “Death Whisperer 2” generated THB 811 million in revenue nationwide, of which THB 549 million was attributable to MAJOR. Other releases such as “Venom 3” (THB 58 million) and “Moana 2” (THB 48 million) fell short of expectations, but the company remains optimistic about upcoming blockbusters such as “Kraven”, “Sonic 3” and the Thai film “Khun Chai”, which is scheduled for late December.
The lower cinema income impacted related segments such as popcorn and beverages, while other business areas showed an improvement: advertising was strengthened by new customers and product tie-ins with “Death Whisperer 2”. Bowling and leasing revenues increased with the economic recovery. Film content Significant contributions from the co-production of “Death Whisperer 2”, in which MAJOR has a 50 percent stake.
In addition, MAJOR will recognize special gains from the sale of long-term leasehold rights of the Ratchayothin branch to Major Cineplex Lifestyle Leasehold Property Fund (MJLF), adding THB 58.56 million to other income. Together with the fair value adjustments, the net profit in Q4/2024 is estimated to be THB 270-320 million, which is similar to the THB 335 million realized in Q4/2023.
Asia Plus Securities expects the movie industry to thrive in 2025, driven by sequels of Thai hits (Death Whisperer, Nakee, The Undertaker, E-Riam Sing and Luang Pee Jazz) as well as global blockbusters (Avatar 3, Mission Impossible 8 and Captain America). MAJOR’s goal is to sell 40 million tickets, surpassing the 2019 pre-COVID target of 34.22 million tickets.
MAJOR plans to expand its high-margin popcorn and beverage segment. They want to introduce creative popcorn containers inspired by Hollywood blockbusters and install 30 self-order kiosks in large cinemas to improve customer convenience and reduce labor costs by THB 30-40 million annually. They also plan to expand the popcorn range to include new flavors such as Nori Seaweed, sold exclusively at 7-Eleven, with the aim of selling 600,000 packs in the first three months.
MAJOR is implementing cost-saving measures in the IT area by switching to usage-based vendor contracts, which could reduce annual expenses by THB 50 million.
Given promising blockbusters, effective cost management and potential valuation gains, Asia Plus Securities maintains an outperform rating on MAJOR, with a DCF-based fair value of THB 20, equivalent to a P/E of 19x.
For the financial management share buyback program, with a maximum budget of THB 1 billion, the buyback period is set from July 16, 2024 to January 16, 2025. This initiative serves as a hedge against short-term share price declines. As of December 24, 2024, MAJOR has repurchased 64.73 million shares, representing 7.81 percent of the total outstanding shares. This leaves THB 96.4 million for further buybacks.
After completion of the buyback program, analysts believe it is likely that MAJOR will reduce its share capital by canceling all repurchased shares that have not been resold. This is in line with MAJOR’s previous buyback project in May 2024, where the company reduced its paid-in capital by 65.53 million shares. Such a reduction, achieved through the cancellation of repurchased shares, would increase the fair value according to the DCF method due to a reduction in the denominator, i.e. the total number of shares.
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