Advertisement
Singapore markets closed

  • Straits Times Index

    3,290.70
    +24.75 (+0.76%)
     

  • Nikkei

    38,229.11
    +155.13 (+0.41%)
     

  • Hang Seng

    18,963.68
    +425.87 (+2.30%)
     

  • FTSE 100

    8,433.76
    +52.41 (+0.63%)
     

  • Bitcoin USD

    60,874.53
    -1,986.27 (-3.16%)
     

  • CMC Crypto 200

    1,265.44
    -92.57 (-6.82%)
     

  • S&P 500

    5,222.68
    +8.60 (+0.16%)
     

  • Dow

    39,512.84
    +125.08 (+0.32%)
     

  • Nasdaq

    16,340.87
    -5.40 (-0.03%)
     

  • Gold

    2,366.90
    +26.60 (+1.14%)
     

  • Crude Oil

    78.20
    -1.06 (-1.34%)
     

  • 10-Yr Bond

    4.5040
    +0.0550 (+1.24%)
     

  • FTSE Bursa Malaysia

    1,600.67
    -0.55 (-0.03%)
     

  • Jakarta Composite Index

    7,088.79
    -34.81 (-0.49%)
     

  • PSE Index

    6,511.93
    -30.53 (-0.47%)
     

Return of concerts is music to GHY Culture & Media's ears, but DBS trims TP

Jovi Ho
·4-min read

GHY’s 1HFY2022 ended June results slipped into the red with a net loss of $1.8 million.

The return of concerts is music to GHY Culture & Media’s ears, though the outlook remains challenging for the entertainment production company, says DBS Group Research analyst Ling Lee Keng.

In an Aug 19 note, Ling is maintaining “hold” on GHY with a lower target price of 43 cents from 45 cents previously. The new target price represents a 9% downside.

GHY’s 1HFY2022 ended June results slipped into the red with a net loss of $1.8 million from a net profit of $3.4 million in 1HFY2021, mainly due to foreign exchange losses and delays in signing contracts, says Ling. “Though the outlook could still be challenging given China’s zero-Covid-19 policy with tight pandemic control measures, the resumption of concert production would help to boost the overall performance.”

ADVERTISEMENT

The group would have posted a net profit of $0.9 million for 1HFY2022 if excluding the forex loss

1HFY2022 revenue declined 53% y-o-y to $20.6 million, mainly due to decrease in revenue contribution from the TV programme and film production business segment. In 1HFY2022, the group recognised revenue mainly in respect of three completed dramas and the sale of a script, compared to two ongoing dramas, one short video and two films in 1HFY2021.

GHY also saw a decrease in revenue contribution from the “others” business segment, which mainly comprises talent management and costumes and props and make-up services, as a result of a decrease in the number of projects.

The gross profit margin of 24.3% for 1HFY2022 is lower than the 28.2% for 1HFY2021, mainly due to Covid-19-related expenses.

Concert pipeline and TikTok plans

Ling notes upcoming concerts in FY2022 and FY2023.

GHY has sold out tickets for Jay Chou’s concerts to be held in Singapore and Malaysia in FY2022 and January 2023, with ticket sales for Australia expected to commence in 3QFY2022.

GHY is also co-producer of concerts with well-known artistes Guns N’ Roses and Power Station to be held in FY2022, to capture the pent-up concert demand, says Ling.

Ling also expects concerts to resume in China in 2023.

GHY is also shifting focus to short video production. “The group is gradually shifting focus to short video production, riding on the success of its collaboration with Beijing Zitiao Network Technology, part of the ByteDance Group that operates Douyin (also known as TikTok),” writes Ling.

GHY completed three short videos in 1HFY2022, and Ling expects more productions going forward. “We project 10 short videos for FY2022F and 20 in FY2023. A short form video typically comprises about 20 to 30 episodes of at least 120 seconds each.”

Earnings outlook

For the concert segment, Ling factored in four concert productions in Singapore (two for Jay Chou, one for Guns N’ Roses, and one for Power Station) in FY2022F. “For FY2023F, we expect the resumption of concerts in China to be likely in 2HFY2023. Hence, we have assumed a total of nine concerts, out of which five would be in China.”

For the drama and film production segment, Ling projects a total of four and five dramas for FY2022F and FY2023F respectively, compared to our previous assumption of four and six dramas.

Ling adds: “Margins are also expected to be lower, mainly due to Covid-19-related expenses. Hence, we have lowered the gross profit margin to 28%/30% in FY2022F/2023F, from 30%/32% previously.”

Overall, Ling reduced net earnings for FY2022F/FY2023 by 2%/30%. “For FY2022, the weakness in drama and film production is covered by the contribution from the concert segment. We did not factor in any contribution from concert production previously.”

Ling has revised down her FY2022F/2023 net earnings estimates by 2%/30% respectively. “For FY2022, the weakness in drama and film production is covered by the contribution from the concert segment. We did not factor in any contribution from concert production previously.”

For the key TV programme and film production segment, Ling pegs the valuation to its peers’ average of 15x P/E. For the concert segment, we benchmarked it to Unusual’s P/E of 20x on historical pre-Covid-19 earnings.

As at 1.15pm, shares in GHY Culture & Media are trading flat at 47 cents

See Also: