A Quiet Place at MAJOR!

It is a dire situation for Major Cineplex Group Public Company Limited (MAJOR) when the fearsome coronavirus has kept everyone off the cinema, plunging MAJOR’s share price by 37.7% in a month and 24.4% in a week.

 

MAJOR closed at ฿14.20/share, declined ฿1.80/share or 11.25% on March 17, 2020. The reason for a huge plummet in today’s session was due to the recent Thai Cabinet’s resolution to restrict people to cinema to prevent the spreading of coronavirus.

MAJOR used to be one of the stocks with strong fundamentals that posted consistent growth in revenue and profit every year.

 

In 2016, MAJOR posted a net profit of 1,188 million baht with a net profit margin of 12.40%. In 2017, the company booked 1,193 million baht with a net profit margin of 12.01%. In 2018, MAJOR recorded a net profit of 1,283 million baht with a net profit margin of 12.03% and in 2019, MAJOR gained 1,170 million baht with a net profit margin of 10.50%.

MAJOR is considered a good dividend-yield stock, offering more than 7% yield. Moreover, MAJOR’s share price does not usually fluctuate due to its high stability.

 

However, the spreading of coronavirus has turned MAJOR upside down in an instant. In fact, cinemas are one of the risky places to catch the virus, and the spreading has kept everyone away from entering a cinema. The once lively place has become such a quiet place in less than a month or two.

One of MAJOR’s greatest hits: Fast & Furious franchise, that supposes to deliver the Fast & Furious 9 this May has been postponed to next year. The franchise usually contributes 400-500 million baht per part to MAJOR’s revenue. Highly anticipated movies like 007, A Quiet Place Part II, Peter Rabbit 2 are also postponed to the second half of this year.

Other blockbuster movies queuing to premiere in MAJOR’s cinema are also rumored to be postponed as well.

Today’s announcement from the cabinet to close cinema would severely hinder MAJOR’s revenue in 2020 for sure.

 

Due to these reasons, analysts have revised MAJOR’s 2020 revenue down to the lowest in four years at 8,800 million baht or 7% lower YoY. The forecasts also indicated that MAJOR’s profit was expected at 893 million baht or 24% lower YoY.

This will be a tough fight for MAJOR, but MAJOR would overcome this hardship, so that everyone will have the opportunity to watch more movies in MAJOR’s cinema.