KGI Securities has raised MAJOR’s rating from ‘Neutral’ to ‘Outperform’, anticipating improved performance in the fourth quarter of 2024 driven by the introduction of new movie line-ups.
Ticket sales in July-August remained steady year-over-year, supported by the releases of popular movies like “Deadpool & Wolverine” and the local film “The Paradise of Thorns.” The analyst remains optimistic about a stronger performance in September and the fourth quarter of 2024, expecting revenue to increase quarter-over-quarter driven by promising film lineups.
However, a year-over-year decline is anticipated due to the success of multiple movies in the fourth quarter of 2023.
Concession sales revenue has shown stability year-over-year quarter-to-date, with improvements expected in the fourth quarter of 2024 onwards, aided by the introduction of a new popcorn flavor and a more attractive film roster. Despite a projected decrease year-over-year from a high base, softness in concession sales due to the absence of promotions is expected.
KGI foresees an enhanced concession margin to elevate the overall gross profit margin quarter-over-quarter and year-over-year to 35%-36% in the second half of 2024 (versus 33.6% in the first half of 2024). Overall, MAJOR is poised for earnings growth half-over-half, although a year-over-year decline is forecasted for the second half of 2024.
Hollywood movies have dominated the top five box office rankings, contributing to 65% of the revenue exceeding Bt200mn per movie from 2019 to 2023. The analyst is optimistic about MAJOR’s cinema revenue experiencing a substantial year-over-year increase in 2025, supported by the release of highly anticipated big franchise movies and the company’s strategies to raise ticket prices.
Earnings estimates for MAJOR have been adjusted, with a slight 1-2% revision for the years 2024-2025, taking into account higher GPM and SG&A as well as a decrease in revenue.
In 2024, MAJOR’s net profit is predicted to decline by 19% year-over-year to Bt782mn, attributed to a high base. However, a significant rebound is expected in 2025, with a robust 26% year-over-year growth to Bt983mn. This surge is anticipated as Hollywood blockbusters are projected to drive a 20% year-over-year increase in cinema income and margin.
The analyst revised MAJOR’s rating to ‘Outperform’ with a target price of Bt17.80 per share.
