Maybank Upgrades WORK’s TP to ฿30/Share, Seeing a Positive View on 2H19 from TV Rating

As of 14.50, Local time in Thailand, the share price of Workpoint Entertainment Public Company Limited (WORK) was at ฿24.30/share, rose ฿1.40 or 6.11%. During the session, the highest WORK’s share price was ฿24.30/share and the lowest was ฿23.40/share with a trading value of ฿187 million.

Maybank Kim Eng Securities recommended “BUY” WORK share with the target price of ฿30.00/share.
In Maybank’s view, WORK is back on track as the creator of the different content, being listed 5 of the Top 10 variety shows (July) with 3 shows gaining ratings of more than 3.00. We still believe that viewers and media buyers are looking forward to the new programs that should compete to grab more ad spending from other channels. Although the TV industry’s overall outlook is slowing this year we believe this new program should not be disappointed and become an upside risk to the TV business forecast in 2H19-2020.

After the final EP of 10 Fight 10 was broadcast on Aug 12, the ratings went well at an average of 2.8, highest 3.2, and became the talk of the town. We see that this momentum should continue with the next big format ‘Social Icon Thailand’ program that seeks the best video clip makers with celebrities and coaches who have years of experience in the online world as commentators. This interesting program is easy to access. When linking with Facebook social platform, it must be easy to go viral. It will be followed by viewers who watch live and re-run so that revenue from both TV and Online should be boosted.  The program will begin airing on August 19 at 8:00 pm on WPTV23.

WORK posted a 2Q19 net profit of THB 73 million excluding extra items, the normalized profit was THB 90 million, increasing 21% QoQ, decreasing 22% YoY from TV business’s in line revenue that grew 12% QoQ, fell 20% YoY. After the big program revamps under the theme “June Full Throttle” where the ratings were at 4+ moving up to 0.66 (vs 0.61 pre-revamp). Sales revenue was lower than expected at THB 96 million, (-18% QoQ) due to special events; the election and Royal ceremonies. However, Maybank believed that the 3Q19 profit should continuously recover QoQ, due to firstly, TV business reflects a clear positive rating from July to August, which Maybank has started to see the rating reaching 0.8 at the beginning of August. Then, secondly, the cost of license fee reduced for a full quarter, thirdly, the momentum that is accelerated by 1346 Hello Shop after entering the normal situation and adding new products.

The share price dropped, reflecting the disappointing 2Q19 results. But Maybank found this is an interesting entry with a more positive view on 2H19 earnings outlook reflected on the rating that began to revive after the June-July program reschedule, while there are short-term positive factors ahead. Maybank,  therefore, upgrade their recommendation to BUY. The next 12 months target price is THB30.00/share based on P / E20F = 23X, according to 12-m Avg.P / E + 1SD.