Analyst Recomm. “BUY” JKN at TP ฿6, Seeing a Stronger-than-expected Overseas Income

KTB Securities (Thailand) (KTBST) has maintained the recommendation of JKN Global Media Public Company Limited (JKN) to “BUY” with an target price of ฿6.40/share.

 

News Flash

JKN’s CEO said the company aims to increase copyright sales in the overseas market to 50% of total revenue in the next three years from 32% currently. The company recently extended its market presence to Latin America while selling more than 100 copyrights in seven countries, comprising Cambodia, Laos, Myanmar, Vietnam, Indonesia, South Korea and Taiwan. Additionally, JKN signed a sales contract for copyrights of Thai soap opera with the media giant “Media Corp” in Singapore through U and meWATCH channels. (Source: Infoquest)

 

Implication

KTBST expects JKN’s overseas revenue from copyrights to increase significantly +20% YoY to ฿622mn in 2Q20E, or 34% of total revenue compared to 31.5% in 2019. Moreover, JKN stands to benefit from the price war among the domestic digital TV operators, as the cost of JKN’s contents is lower than in-house production while the digital TV operators are keen to cut their costs to offset the impact from ad rate cuts.

 

Analyst maintains JKN’s 2020E earnings forecast, a net profit to grow +9.4% to ฿277mn as 1) revenue from copyrights would increase +9%, and 2) gross profit margin would widen slightly to 41.3% from 41.1% in 2019.

 

KTBST reiterates a BUY rating on JKN and a target price of ฿6.40, which is pegged to 2020E PER of 14.1x, or -0.75 SD below its 3-yr average of 21.0x. Analyst sees upside to the 2020E forecast given stronger-than-expected overseas revenue and improved performance in CNBC.